State Capitalism, Contentious Politics and Large-Scale Social Change (Studies in Critical Social Sciences, 29) [Illustrated] 9789004194458, 1991199760, 9004194452

Citation preview

State Capitalism, Contentious Politics and Large-Scale Social Change

Studies in Critical Social Sciences Series Editor

David Fasenfest Wayne State University Editorial Board

Chris Chase-Dunn, University of California-Riverside G. William Domhoff, University of California-Santa Cruz Colette Fagan, Manchester University Matha Gimenez, University of Colorado, Boulder Heidi Gottfried, Wayne State University Karin Gottschall, University of Bremen Bob Jessop, Lancaster University Rhonda Levine, Colgate University Jacqueline O’Reilly, University of Brighton Mary Romero, Arizona State University Chizuko Ueno, University of Tokyo

VOLUME 29

State Capitalism, Contentious Politics and Large-Scale Social Change Edited by

Vincent Kelly Pollard

LEIDEN • BOSTON 2011

Cover photo provided courtesy of Marcin Szczepanski, a photojournalist and video producer for the Detroit Free Press. The photo was taken in Beijing in 2009. More of Marcin’s work can be viewed at http://www.marcinvisuals.com. This book is printed on acid-free paper. Library of Congress Cataloging-in-Publication Data State capitalism, contentious politics and large-scale social change / edited by Vincent Kelly Pollard. p. cm. -- (Studies in critical social sciences ; 29) Includes bibliographical references and index. ISBN 978-90-04-19445-8 (hardback : alk. paper) 1. Economic policy. 2. Business enterprises--Government policy. 3. Communism--Case studies. 4. Capitalism--Case studies. 5. Social change. I. Pollard, Vincent Kelly, 1944HD87.S743 2010 330.12’2--dc22 2010047861

ISSN 1573-4234 ISBN 978 90 04 19445 8 Copyright 2011 by Koninklijke Brill NV, Leiden, The Netherlands. Koninklijke Brill NV incorporates the imprints Brill, Hotei Publishing, IDC Publishers, Martinus Nijhoff Publishers and VSP. All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission from the publisher. Authorization to photocopy items for internal or personal use is granted by Koninklijke Brill NV provided that the appropriate fees are paid directly to The Copyright Clearance Center, 222 Rosewood Drive, Suite 910, Danvers, MA 01923, USA. Fees are subject to change.

CONTENTS List of Tables.............................................................................................. vii Notes on Contributors .............................................................................. ix Acknowledgements ................................................................................... xi In Memoriam: Vincent Kelly Pollard (1944–2010)............................. xiii David Fasenfest Foreword.....................................................................................................xv Peter T. Manicas 1. State Capitalist Analysis—Before the Russian Revolution, in Reaction to Stalin’s Consolidation of Power, and after the Cold War ...........................................................................................1 Vincent Kelly Pollard 2. State Capitalism versus Communism: What Happened in the USSR? ........................................................................................ 21 Satya Gabriel, Stephen A. Resnick, and Richard D. Wolff 3. Labor, Exploitation and Capitalism in Russia before and after 1991 .............................................................................................. 39 Michael J. Haynes 4. The ‘Russian Question’ and the U.S. Left ......................................... 65 Martin Oppenheimer 5. Planning and the Fate of Democracy: State, Capital, and Governance in Post-Independence India ................................. 81 D. Parthasarathy 6. What Happened to Chinese Communism: The Transition from State Feudalism to State Capitalism ...................................... 119 Satya Gabriel, Stephen A. Resnick, and Richard D. Wolff 7. Labor Representation and Organization under State Capitalism in China .......................................................................... 135 Jackie Sheehan 8. A Consideration of China’s Incomplete Retreat from State Capitalism .......................................................................................... 151 Rumy Hasan

vi

contents

9. Chinese ‘Develop the West’ Campaigns and their Environmental Impacts: The Post-Socialist Condition in China ............................................................................................ 183 Yuehtsen Juliette Chung 10. State Capitalist Aspirations and the Two-Stage Theory of Revolution in the Philippines.................................................... 209 Vincent Kelly Pollard Index ........................................................................................................ 229

LIST OF TABLES Chapter Three Table 1

Income Distribution in Russia, 1991–1997 .......................... 60

Chapter Eight Table 1 Table 2a Table 2b Table 3

China’s Exports and Imports 1978–2007 ($bn) ................. 164 China’s inward FDI stock, 1980–2007($bn) ....................... 166 China’s FDI Inflows, 1988–2007 ($bn) ............................... 166 Index of GDP 1952–2007 (1952=100) ................................ 168

Chapter Nine Table 1

Industrial and Transportation Development in Ethnic Autonomous Regions, 1998 and 1952 ................................ 194 Table 2 Growth in Per Capita Income of Rural Villagers (Yuan) 1990–2007.................................................................. 196 Table 3 Occurrences of Pollution Accidents in Gansu and the Western Region 1998–2006 ........................................... 202 Chapter Ten Table 1

Four Key Themes in the Two-Stage Theory of Revolution .............................................................................. 210

NOTES ON CONTRIBUTORS Yuehtsen Juliette Chung is Assistant Professor of History at the National Tsing Hua University (Taiwan). She has published Struggle for National Survival: Eugenics in Sino-Japanese Contexts, 1896–1945 (Routledge, 2002). Her forthcoming book is entitled Science, Biopolitics and Social Nexus: Eugenics in China and its Transnational Context, 1895–2000. Her current research and teaching interests focus on the quarantine system in Chinese Maritime Customs Service and epidemic control in East Asia. Satya J. Gabriel is professor and chair of the department of economics at Mount Holyoke College. He is the author of Chinese Capitalism and the Modernist Vision (2006) and co-author of Microfinance: The Way of Grassroots Finance (2009). Rumy Hasan is a senior lecturer at the University of Sussex, UK. After specializing in the transition of the former Eastern bloc countries, he has in recent years focused more on the economies of East Asia, in particular, China. Mike Haynes is Professor of International Political Economy at the University of Wolverhampton in the United Kingdom. He has written widely on developments in Russia and the history of the USSR as well as the general pattern of the development of capitalism and the role of the state. He is currently exploring the role of corporate crime and corruption in the history of capitalism and its relationship to neo-liberal policies. Martin Oppenheimer is Emeritus Professor of Sociology at Rutgers University, New Brunswick, NJ, where he taught for 32 years. He has served for many years as a Critical Sociology board member. He is the author of The Urban Guerrilla (1969), White Collar Politics (1985), The Sit-In Movement of 1960 (1985), The State in Modern Society (2000), and The Hate Handbook (2000) among other writings. An essay on the 50th anniversary of the sit-ins is in press at Against the Current.

x

notes on contributors

D. Parthasarathy is Professor of Sociology at the Department of Humanities and Social Sciences, Indian Institute of Technology, Mumbai. He has earlier worked at the International Crops Research Institute for the Semi-arid Tropics (1995–97), has been a RMAP Visiting Fellow at the Australian National University (2003), a Panos Media Fellow, London (2003), and a Visiting Senior Research Fellow (2008–09), Asia Research Institute, National University of Singapore. He is the author of Collective Violence in a Provincial City (OUP, 1997), co-author of a monograph on Next Generation Tools for Assessing Vulnerability and Adaptation to Climate Change, IDS Sussex, 2007, and the author and co-author of a number of articles in journals and edited books in the areas of development studies, agricultural sociology, urban studies, and governance. He is currently co-editing a volume on Micro-finance and Women’s Empowerment. Stephen Resnick is Professor of Economics at the University of Massachusetts, Amherst. He has authored several books and numerous articles in Marxian theory. Many of these are co-authored with Richard Wolff. Jackie Sheehan is an Associate Professor in Contemporary Chinese Studies at the University of Nottingham. Her research focuses on Chinese labour and political history from 1949 to the present day. She is the author of Chinese Workers: A New History (Routledge, 1998), and has published extensively on China’s state-enterprise reforms. She also researches Chinese migrant labour in the UK and Europe, particularly forms of coerced or unfree labour among migrant workers and human trafficking. Richard D. Wolff is Professor of Economics Emeritus at the University of Massachusetts, Amherst; he also currently teaches at the New School University in New York City. His most recent books are two co-authored with Stephen Resnick – Class Theory and History: Capitalism and Communism in the USSR and New Departures in Marxian Theory (Routledge 2002 and 2006) – and one authored alone – Capitalist Hits the Fan: the Global Economic Meltdown and What to do About It (Interlink Books 2010). His many articles on the economic crisis since 2007 as well as videos of interviews, classes taught, lectures, etc. are available freely from www.rdwolff.com.

ACKNOWLEDGEMENTS My sincerest thanks to friends, colleagues and institutions, for without their personal, intellectual and material support this book could not have been completed. Two conference panels on state capitalism laid much of the groundwork for this book. Discussants on those panels played important roles in our intellectual development. In 2003, Lawrence C. Katzenstein (University of Minnesota and Rutgers University) insightfully drew on a variety of literature to comment on papers presented on the ‘State Capitalism: Obstacle or Transmission Belt to Democratization’ panel, 44th Annual Convention of the International Studies Association, in Portland, Oregon. And in 2004, Paul Midford (Kwansei Gakuin University, Japan, and Norwegian University of Science and Technology) ably served as discussant on the panel ‘Ideology, Organization, Leadership and Resistance in Communist and Noncommunist Asian State Capitalist Societies,’ at the 56th Annual Meeting of The Association for Asian Studies, in San Diego, California. A generous ‘border-crossing’ grant from the Association for Asian Studies supported participation by Professor D. Parthasarathy (IIT-Bombay) on the 2004 panel. Colleagues affiliated with institutions in a combined total of seven countries on three continents participated on those panels. An earlier version of Chapter 10 was presented as “Revolution Stalled: State Capitalist Ideology and the Communist Party of the Philippines” on the International Sociology Panel at the 2003 Annual Meeting of the Hawai‘i Sociological Association. I thank colleagues on conference program committees for their encouraging support of our work. To consolidate gains achieved by the two conference panels, we proposed an edited, peer-reviewed state capitalism symposium. Not incidentally, it was Professor Parthasarathy who emphasized the appropriateness of Critical Sociology as a venue for our research in light of the globally relevant focus of our work. Earlier versions of contributions to this book benefited from comments, questions and criticisms by ten dedicated, then-anonymous reviewers. These colleagues are as follows: Robert K. Arakaki (University of Hawai‘i-Mānoa and Tokai International University), Dominique Caouette (Université de Montréal), Joseph Y.S. Cheng (City University of Hong Kong),

xii

acknowledgements

James Allen Dator (Hawai‘i Research Center for Futures Studies), Martin F. Farrell (Ripon College, Wisconsin), Nigel Harris (University College London), Donald M. Seekins (Meio University, Okinawa, Japan), Jo-Young Shin (Daejin University, Korea), Alvin Y. So (Hong Kong University of Science and Technology), and Regina F. Titunik (University of Hawai‘i-Hilo). The articles appear in Critical Sociology vol. 34, issue 4 (July 2008). In the final year of that project, Denis Wall was most helpful as Managing Editor of the journal. Post-publication, four of those articles were substantially rewritten and (in two cases expanded) to become Chapters 1–3, 6, and 8 of this book. An expanded version of what first was published as critique of our state capitalism symposium in Critical Sociology, vol. 35, issue 3 (May 2009), appears here as Martin Oppenheimer’s chapter. From the beginning of the Critical Sociology symposium and on into the present book, David Fasenfest, editor of Critical Sociology and the Studies in Critical Social Sciences series for Brill, has provided me with timely, relevant and consistently well-founded advice. A better guide would surely be difficult to find. Copyediting by sociologist Lesley Kenny has made us all look better. Also, I wish to thank librarians at Hamilton Library (University of Hawai‘i-Mānoa), the Third World Studies Center (University of the Philippines-Diliman), and The Joseph Regenstein Library (University of Chicago) for their assistance. In the Spring 2009 semester, Michael T. Kratzke ambitiously tackled, summarized and commented on the entire Critical Sociology state capitalism symposium for a paper that he wrote in my Contemporary Asian Civilization class. I wish to thank Mr. Kratzke and also all the students in political science, Asian studies and honors research classes that I have taught since the 1990s. Their challenges stimulated me to clarify my understanding of state capitalism and their interest has provided the evidence that motivated undergraduates care deeply about this topic. A timely grant for copyediting from the Chung-fong and Grace Ning Chinese Studies Fund (Center for Chinese Studies at the University of Hawai‘i-Mānoa) in 2010 facilitated the tireless and careful copyediting. At the University of Hawai‘i-Mānoa, moral support from colleagues in the Social Science Research Institute, the Hawai‘i Research Center for Futures Studies, and the Asian Studies Program was appreciated at every stage of this project. Finally, my sincere thanks go to each of the book’s co-authors for your patience, commitment and good humor throughout this journey.

IN MEMORIAM VINCENT KELLY POLLARD (1944–2010) Vincent Pollard died on June 1, 2010 after suffering a stroke a few days earlier. At the time of his death he was a lecturer at the University of Hawai’i at Mānoa and, as is all too often the case, a road warrior traveling from one precarious teaching obligation to the other. In spite of these demands on his time, Vincent was a dedicated scholar and teacher, and one only needs to look at the comments left on the memorial site created in his honor by the Center for Southeast Asian Studies at the University of Hawai’i at Mānoa to see how well regarded he was by his colleagues and students (www.cseashawaii.com/wordpress /2010/06/in-memoriam-vincent-k-pollard-1944–2010/). His was a life of a scholar-activist in the Gramscian tradition, an organic intellectual who followed in a path of never forgetting what was important in the struggle to improve the lives of those around him. Early in his life he was drawn to activism, especially around the Civil Rights movement in Chicago when, as a 19 year old, he passed out leaflets for Martin Luther King Jr.’s speech at Soldier’s Field in June of 1964. Moved by social activism, Vincent spent the summer of 1965 at the Southern Christian Leadership Conference’s “Summer Community Organization and Political Education” (SCOPE) Project, and later that year worked to build support for the Voting Rights Act. This period motivated his activism, and in his own words he …quickly realized that linking my commitment to the Civil Rights Movement inescapably led to opposing the Second Indochina War (the U.S. War in Vietnam). A further link between the denial of constitutional rights and the Vietnam War was the poverty that I witnessed in my short time in Chatham County, Georgia: It was more severe than anything I had seen on Chicago’s West Side. (www.crmvet.org/vet/pollardv.htm)

From there, as an activist, he worked for social justice, eventually becoming a member of United Auto Workers Local 551 while working at Ford’s Chicago Assembly Plant for 15 years. Eventually, he chaired the Jearl Wood Defense Committee, a case that combined civil rights issues, working conditions of industrial workers, early indications of Post-Traumatic Stress Disorder among Vietnam combat veterans, and the ravages of imperialism.

xiv

in memoriam: vincent kelly pollard (1944–2010)

This current edited volume began in modest ways, initially as a series of conversations he and I had over email starting in 2004 (sadly, I never got to meet Vincent). Vincent was interested in what he called State Capitalism (among a broad range of interests). He had been to several conferences where the work of others stimulated him, and early on thought about writing an article for Critical Sociology; the article idea eventually grew to become a special issue for which he wrote the introductory essay (“Introduction and Overview: Actors, Obstacles and Social Change in European and Asian State Capitalist Societies” Critical Sociology July 2008 34(4): 525–538). Working with his collaborators in this volume and with his colleagues in Hawai’i, we have managed to complete Vincent’s final project. There is a missing last chapter that Vincent planned to write for this collection, entitled “The End of the Cold War, Contemporary State Capitalist Analysis, and the Future of Anti-Capitalist Social Movements.” We have not been able to find a draft of this chapter among his effects so it has not been included in this volume and sadly it seems lost to us. One can only speculate on what Vincent was planning to write by considering his own words about this last chapter from his introductory chapter to this volume, in which Vincent writes: “A denouement (Chapter 11) considers what all of this means for future anti-capitalist social movements.” We have lost a colleague, a scholar, a teacher, and an advocate for social justice. I hope this volume is a fitting testament to Vincent’s life and work. He will be missed. David Fasenfest Series Editor, Studies in Critical Social Sciences Wayne State University

FOREWORD Wrestling with Leviathan is a highly original collection of work: original because it provides case studies of a number of complex political economies —the former USSR, China, India and the Philippines— from a perspective the authors call ‘State Capitalism.’ The term is historically contentious and never became a theoretical tool of much interest to dominant strains of thought, either mainstream or the Marxist left. The authors recognize this. Martin Oppenheimer, writing against the background of ‘the Russian question,’ provides a critical history —and alone in the volume remains skeptical regarding the usefulness of the concept. The editor, Vincent Pollard, offers a typology of state capitalist theories, and one wishes very much that he could have completed his planned concluding chapter; it would have engaged directly with criticisms of the concept. The other authors respond to the challenge by providing empirically grounded narratives each of which is a major contribution to the literature. These analyses are guided by three questions posed in Pollard’s Introduction: ….what can happen when the ruling party controls most, or a large proportion, of the society’s capital? How does the centralization of capital and the attempted national planning in communist, transitional and formerly communist countries differ from capital concentration and government intervention in non-communist countries? And to what extent does competition between national, regional and local state organizations and parastatal institutions in communist countries mirror competition between firms in traditional European and American capitalism?

The authors demonstrate a remarkable command of comparative and interdisciplinary inquiry and try to show, concretely, that the answers to Pollard’s questions require understanding the very different premodern histories of the cases under study, how the ruling parties came to control societies’ capital and how the international situation and specific class and local institutional structures affected outcomes. Those interested in the idea of state capitalism can learn a great deal from the essays in this very useful volume. Peter T. Manicas University of Hawai‘i at Mãnoa

CHAPTER ONE

STATE CAPITALIST ANALYSIS—BEFORE THE RUSSIAN REVOLUTION, IN REACTION TO STALIN’S CONSOLIDATION OF POWER, AND AFTER THE COLD WAR Vincent Kelly Pollard In the Hebrew Bible, Leviathan is a fearsome sea monster. In early Anglo-Saxon art, the whale-monster Leviathan guards the gates to Hell. And in Thomas Hobbes’ political metaphor, Leviathan emerges as a powerful state manager of deadly violence. Everywhere, the state is part of the society. Leviathan mirrors a key aspect of state capitalism to the extent that powerful states (official governments) enable highly centralized forms of Capitalism. Wrestling With Leviathan highlights the limits of social change under state capitalism in the twenty-first century. After the Great Recession hit the global capitalist fan in 2008, curiosity about state capitalism reached the Internet. On May Day 2010, for example, a Google phrase search for ‘state capitalism’ elicited 248,000 hits. And if you suspect that international capitalism will experience another major crisis in your lifetime, Wrestling With Leviathan is the book for you. In the past 100 years, hundreds of millions of urban workers, housewives, other women domestic workers, farmers, ethnic minorities and oppressed groups followed the leadership of political parties that applied the social and political theories of Karl Marx and Vladimir Lenin. In this latest age of globalization, those ‘ideas’ and others are among globe-traveling agents of potential planetary change (Pollard 2004:1). But among these ideas are illusions and misplaced nostalgia based on the unexamined histories of past struggles. Therefore, if you expect that newly radicalized anti-capitalist social movements in Asia, Africa, Europe, North and South America, and the Pacific will again challenge the rule of global capitalism, read this book. Since an understanding of intended pathways and detours taken by earlier social movements is a precondition for beneficial social change, this book will help those who wish to avoid the strategic errors made by earlier

2

vincent kelly pollard

Left political parties. To social theorists and participant-observers, this book presents case studies of communist, non-communist and postcommunist state capitalist societies.1 Those who find analytic and liberating potential in the insights of Karl Marx (and those who are skeptical) need to understand why that potential was not met in the states whose ruling parties claimed Marx’s social and political tradition. State capitalism’s intellectual pedigree is lengthy but sporadically developed. Yet at least until the advent of China’s Opening Up and Reform period in 1978 and the break-up of the former Soviet Union in 1991, state capitalism was often dismissed on the Left and the Right as a politically suspect topic. In any case, the social and intellectual history of state capitalist analysis began at least four decades before the October Revolution of 1917. But for most of its history, that analytic tradition has been both plural and scattered. Along with differences in language and locale, the lack of interest in sustained exchange among epistemic communities using state capitalist analyses is partly attributable to competing political loyalties. In other words, the potential of pluralism was squandered by parochialism. Tendencies towards greater state-led concentrations of capital under diverse political regimes have been praised, endured and condemned since the late nineteenth century. A highly centralized variant of capitalism, state capitalism was not clearly envisioned by classical political economist Adam Smith or even by Karl Marx who elaborated Smith’s labor theory of value. Without straining the textual evidence, one certainly may say that discussions of accumulation in Capital (Marx 1971a:713–719; 1971b:246) and perhaps in the Grundrisse (Marx 1973) weakly prefigure the dynamics of one type of state capitalism to emerge in the twentieth century. In the last quarter of the nineteenth century, social analysts of early industrializing societies in Europe noted emerging indicators of state capitalism. “As long ago as 1877,” for example, “Alfred Wagner, a German public finance theorist, had advanced a ‘law of increasing state

1 In Chapters 1 and 10, I have refrained from using ironic quotation marks in referring to self-styled socialist or communist parties or to their political vision. While there may be as many definitions of socialism as there are political agendas, the lack of quotation marks is not a political endorsement of any political regime. Nor does it imply that the working classes governed those societies, let alone that they were classless societies.

state capitalist analysis

3

activity’ ” (Castles 2002:218–219). Little of Wagner’s work has been translated into English. But according to Wagner’s Law as summarized by Francis Castles, “the very process of industrialization through which societies became more affluent produced problems which forced them to devote even greater proportions of national income to the provision of collective goods” (Castles 2002:219). Wagner “defined the term state socialism for comprehensive state intervention in and regulation of the economy” (Payne 1995:55; italics in the original). Translated from Wagner’s Grundlegung der politischen Ökonomie (1894), a summary of his ‘platform for state socialism’ lists three points: “1. Nationalization and municipalization of production enterprises for the general good; 2. the replacement of free-market prices by price controls; 3. implementation of social and just financial and taxation policies” (Barkai 1990[1977]:85). But in the twentieth-century, state capitalist analysis emerged from controversies over the inner meanings of capitalism, socialism and communism in the former Soviet Union, Eastern Europe, China, Vietnam, Cuba and elsewhere. Intermittently, state capitalist analysis was refined in debates that still echo today. When World War I erupted in 1914, Capital was more highly concentrated in the late Russian Empire than in Germany or England (Carr 1966[1951–1953]:55; Fainsod 1967:25). The Bolsheviks’ principal revolutionary base was the numerically small but strategically placed Russian working class. To reach a broader social base, the militant slogan ‘Bread, land and peace!’ resonated in the war-stricken countryside where the agricultural majority of the Russian population led miserable lives. And in the second of two Russian revolutions of 1917, the Bolshevik faction of the Russian Social-Democratic Labor Party overthrew a Menshevik-led Provisional Government that came to power earlier in the year. It did so with crucial assistance from the Left Social Revolutionaries to whose semi-anarchist tendencies the Bolshevik leader Vladimir Lenin appealed (Lenin 1965[1917]:391– 395, 461). A four-year Civil War ensued, ending in December 1921 or at the latest, in early 1922. By then, institutionalized working class influence over Party leadership was attenuated (Hobson 1988:3–21; but compare Reed 1919), although the importance of this fact is still debated. According to Michael Kort, the ‘guide’ that “Lenin was using…..came from…..the sophisticated combination of private enterprise and state planning developed in capitalist Germany during World War I” (Kort 2006:119; compare James 1969:26).

4

vincent kelly pollard

Among other concerns, the following four issues mattered to intellectually significant epistemic communities favoring some version of state capitalist analysis: 1) the question of who gets what, when, where and how; 2) the evidence for class domination and resistance to domination; 3) economic competition between government ministries and national economies; and 4) the extent to which the law of value has continuing heuristic power. In turn, each of these issues has ontological, normative, methodological and policy implications for future social movements. Each of the following chapters addresses one or more of these issues. In books, articles and pamphlets published since the 1920s, at least four discernible streams of policy-relevant state capitalist analysis emerged. The first of these is statist (more commonly described as Marxist-Leninist), although most supporters of historically MarxistLeninist regimes reject the connotations of my label ‘statist.’ Less precisely, many of these have been characterized as Stalinist or Maoist. A second stream is ‘antimonopoly-reformist’ (Pollard 2001:1595) or ‘state monopoly capitalist’ as it has been styled by populist movements in the U.S. and sometimes by the political parties influenced by the Communist Party of the Soviet Union (Afsenyev, Andreyev, Avsenev, et al. 1974:196–217) and other organizations. Writing pseudonymously at the end of the first decade of the Cold War, Ygael Gluckstein elaborately distinguished between monopoly capitalism (referring to “a partial negation of the Marxian law of value but on the basis of the law of value itself ”), pure capitalism (meaning “commodity production”), state capitalism (to indicate “the stage in which the capitalist state becomes the repository of the means of production”), and state monopoly capitalism (the “capitalist war economy”) (Cliff [Gluckstein] 1956:153–154). And in a book chapter on ‘State Monopoly capitalism,’ Benjamin Fine and Laurence Harris defined state monopoly capitalism as “a stage at which the state directly participates or ‘intervenes’ in the economy” (Fine and Harris 1979:132). A third type of state capitalist analysis has been characterized as ‘libertarian-Marxian’ (Pollard 2001:1595). The theorist Raya Dunayevskaya pioneered in this stream. In the 1930s, she broke ranks politically from Leon Trotsky over his characterization of the Soviet Union as a ‘degenerated workers’ state.’ Dunayevskaya challenged Trotsky’s reference to the Soviet Union as a meaningful workers’ state merely because industry and trade happened to be nationalized under Communist Party control or (as he argued) because efforts were made to implement national planning.

state capitalist analysis

5

In the ‘libertarian-Marxian’ stream, Dunayevskaya collaborated with Trinidad-born African American revolutionist and scholar C.L.R. James (James 1969:5, 7). But just how clearly did Marx foresee the rise of state capitalism? On that question, Dunayevskaya’s assessment evolved. “The state-capitalism at issue is not the one theoretically envisioned by Karl Marx in 1867–1883,” she wrote, “as the logical conclusion to the development of English competitive capitalism” (Dunayevskaya 1967:5). But by the mid-1970s, Dunayevskaya felt confident that Marx really had noticed early indicators of trends towards twentieth-century state capitalism (Dunayevskaya 1982 [1975]:22). In Dunayevskaya’s analysis, Josef Stalin, Nikolai Bukharin (later purged) and other self-described socialist or communist rulers of the USSR had quickly become a collective capitalist elite whose use of nationalized property controlled the masses while resisting direction from them. Rejecting claims by the USSR that lacked empirical evidence, she argued that human labor in the Soviet Union became a mere object to be manipulated by those rulers (Dunayevskaya 1973:148). Thus, in her view, both Stalin and Trotsky were dazzled by the technocratic magic of nationalized property. Suggesting an elective affinity with the ‘antimonopoly-reformist’ stream (Pollard 2001:1595), she also predicted that the US “is not exempt from State Capitalism” (Dunayevskaya 1982 [1975]:258). The antimonopoly-reformist stream of analysis arose in reaction to increasing concentrations of economic power in twentieth-century capitalism, particularly in Western Europe, Canada and the U.S. (Melman 1997:1–11). Influenced by Dunayevskaya and others, in the 1970s Christopher Hobson and Ronald Tabor began applying Marx’s law of value to reinterpret the social and political development of state capitalism in the Soviet Union. A refinement of their pamphlets and theoretical essays on state capitalism later appeared as a book (Hobson and Tabor 1988:421, 424–428, 434, 439). Perhaps because it appeared during the third year of Mikhail Gorbachev’s tenure as leader of the Communist Party of the Soviet Union, it did not receive widespread attention. In contrast to the libertarian-Marxian stream (Pollard 2001:1595), Howard Davis and Richard Scase reject statist Marxist-Leninist and libertarian Marxian state capitalist analyses. Instead they refer to ‘bureaucratic’ and ‘totalitarian’ features of ‘state socialism’ on the grounds that pre-1989 Eastern Europe lacked familiar traditional capitalist institutions (Davis and Scase 1985:6–10). Robert Vincent Daniels agrees with those who “emphasize the non-proletarian nature of the Stalinist system” but is unconvinced by claims made by James Burnham

6

vincent kelly pollard

(Burnham 1941) or Milovan Djilas (Djilas 1957) that “Soviet socialism” was a unique form of “class society” (Daniels 1991:118).2 Above, I have referred to three streams of state capitalist analysis. In a fourth, post-Trotskyist anarchist analysis emerging from the libertarianMarxian stream, Tabor (noted above) acknowledges pedagogically metaphorical uses for the law of value but criticizes it as part of a closed belief system and, therefore, not very helpful in explaining the causes of profit in modern capitalist systems, including “forms of highly centralized, stratified capitalism without the capitalist class, in other words state capitalism” (Tabor 2002:88). Comparatively, state-capitalist analysis has implications for the development of ideology, organization and leadership in communist and noncommunist societies. Variable concentrations of state-led capital in early and late industrializing societies have attracted attention from analysts who use the concept of state capitalism in ways that some find frustratingly inconsistent (Wilczynski 1981). The expansion of government services and enterprises in otherwise politically and socially diverse countries has also attracted attention from practitioners and scholarly analysts of state capitalist analysis. Other examples preceding the publication of the present book include the following: Australia and New Zealand (Doherty 1997), and the Soviet Union (Dunayevskaya 1944a; 1944b; 1967; 1973; 1982; James 1969; Bettelheim 1976 [1974]:16–17, 57, 62, 480–483, 508–511; Nicolaus 1975).3 During the twentieth century, scholars also characterized other countries as state capitalist at one time or another, including Nazi Germany (Neumann 1944), fascist Italy (Payne 1995), and Fidel Castro’s Cuba (Mark 1997). Also, “nationalization” and “state-guided economic planning” in France’s “mixed economy” during 1936–1950 have been labeled state capitalist (Chapman 1991:8–9, 70–71, 294– 295), as has the U.S. national security state since World War II (Harris 1991; Melman 1997:1–11), and Japan under Liberal Democratic Party rule (Katzenstein 2003). And in a comparison with eight other countries during 1971–1979, even Canada has been classified as state capitalist (Laux and Molot 1998:12, 13, Table 1).

2

In a conference paper from another level of analysis, Walter Daum asserts that C.L.R. James overemphasized “labor relations in production” (Daum 1994). 3 Nicolaus’ and Bettelheim’s state capitalist analysis of the Soviet Union received a spirited critique by Michael Goldfield and Melvin Rothenberg (Goldfield and Rothenberg 1980).

state capitalist analysis

7

Meanwhile, on the political Right, conservatives outside the libertarian milieu usually resisted any suggestion of shared underlying fundamental dynamics in the workings of capitalism, East and West. To classic liberals who define capitalism as free markets, private property and limited government intervention, state capitalism is a contradiction in terms. But conceptualizations of capitalism by influential sources like the Chicago School of Economics are limiting, as well. Even though competition matters (Friedman 1982:13–14), discussions that overemphasize competition slight the surprisingly different historical forms under which it has occurred (Marx 1971b [1894]: 853–876). Thus, conflicting political agendas apparently discouraged communication. Whether state capitalism was considered vibrant, threatening or happily moribund has depended on one’s broader philosophical and political commitments. So, what can happen when the ruling party controls most, or a large proportion, of the society’s capital? How does the centralization of capital and the attempted national planning in communist, transitional and formerly communist countries differ from capital concentration and government intervention in noncommunist societies? And to what extent does competition between national, regional and local state organizations and parastatal institutions in communist societies mirror competition between firms in traditional European and American capitalism? From more than one “level of analysis” (Singer 1961:77), Chapters 2–10 of Wrestling with Leviathan respond to these questions. Using Asian and European languages in their research on state capitalism, the contributing authors are affiliated with universities in Asia, Europe, North America and the Pacific. These colleagues draw on the disciplinary resources of sociology, social history, political economy, environmental science, and politics. Except in Chapter 4, they use the analytic lens of state capitalism to explain the extent and limits of change in communist, post-communist and noncommunist societies in Europe and Asia during the twentieth century. In Chapters 2–10, these social histories begin with the former Soviet Union and, briefly, the postUSSR Russian Federation (Chapters 2–3), then move on to the meaning of ‘the Russia Question’ on the Left, especially in the United States (Chapter 4). Subsequent chapters discuss state capitalism in the Republic of India (Chapter 5), the People’s Republic of China (Chapters 6–9), and a near-insurrectionary failure by a state capitalist party in a dual-power situation in the Philippines (Chapter 10).

8

vincent kelly pollard

In revolutionary Russia and China, understandings of class, self and humanity fused as a radicalizing force. “In late-imperial Russia and Republican China,” urban workers affirmed “their intrinsic worth as persons” (Smith 2008:110). First in Russia and not much later in China, they joined and supported the political parties who advocated revolution. Although I am quite critical of many of the leaders of those political parties, like my co-authors, I do not doubt the courage or selflessness of the rank-and-file, let alone the need for immediate and fundamental change in their lives. Satya Gabriel, Stephen Resnick and Richard Wolff lead off with Chapter 2 (“State Capitalism versus Communism: What Happened in the USSR?”). Since 1917, debates concerning the USSR mostly juxtaposed socialism there to capitalism in Western Europe and the United States. Competing standards of ‘private property versus state property’ and ‘markets versus planning’ ostensibly distinguished the two systems from one another. In 2009, as states again massively intervened to manage another major capitalist crisis, the same basic notions of capitalism and socialism reemerged in media and political debates. In contradistinction, Chapter 2 dismisses ‘property and market conceptualizations’ of capitalism and socialism. As with Marx, the organization of surplus labor distinguishes among capitalism, socialism, and communism. Attentive participant-observers desiring to learn from Gabriel, Resnick and Wolff ’s state capitalist history of the USSR (and their later chapter on China) are urged to ask, ‘Who produces a surplus, who gets it, and what do they do with it?’ This approach sheds new light on basic similarities between capitalism and socialism and the shared difference of both from ‘true communism.’ While agreeing with Gabriel, Resnick and Wolff on many historical facts, Michael Haynes approaches state capitalism in the Soviet Union from a different level of analysis. Haynes’ Chapter 3 (“Labor, Exploitation and Capitalism in Russia Before and After 1991”) handles a broad sweep of Russian social history from the late nineteenth century until the early twenty-first century. In publications other than this book, Haynes has been a collaborator of Rumy Hasan’s—the author of Chapter 8. For Haynes, the exploitation of the Russian working classes before, during and after the state capitalism of the USSR is grounded in the context of global capitalism. Haynes’ notion of state capitalism helps us to understand Russian capitalist development within the framework of global capitalist development marked by social inequalities, power imbalances, and economic and military competition. The failure of the Russian Revolution of October 1917 to

state capitalist analysis

9

deliver on its promises led, in Haynes’ phrase, to “a highly intense form of State Capitalism.” It lasted until 1991. After the collapse of the Soviet Union that year, underlying continuities in the different regimes in the Russian Federation (‘Russia’) are explained by working class exploitation. In Chapter 4 (“The ‘Russian Question’ and the U.S. Left”), Martin Oppenheimer explains that within the U.S. Left, one’s assessment of the class structure of the Soviet Union has often determined one’s organizational affiliation. Subject to vigorous debate and even deadly physical combat, divisions over ‘the Russian Question’ have accounted for splits on the Left from 1919 onwards. The debate still divides Left theorists and activists—in attempts to understand the nature of change in Central Europe and the Russian Federation today. Significantly, Oppenheimer challenges the use of ‘state capitalism’ by contributors to this book. In the 1940s, 1950s and 1960s, the leadership of social movements in Asia, Africa and Latin America embedded their state capitalist aspirations in nationalism. This did not surprise sociologist Albert Szymanski. In his Logic of Imperialism, he remarked on the ‘option’ of state capitalism for “petty-bourgeois regimes” coming to power “by either popular revolutions against traditional monarchies or colonial regimes, or by popular military coups d’etat made by lower-level officers with firm roots in the petty bourgeoisie’”(Szymanski 1981:428, 429). Later, in the same work, Szymanski elaborates: To the extent that the state-owned economic enterprises are autonomous of central state control, the managers of such enterprises may well be regarded as ‘state capitalists’ with interests similar to those of the internal bourgeoisie to which they are often tied both in joint ventures and social life. These two groups tend to have a common interest in creating an economic basis for a strong state that can advance their common interest. (Szymanski 1981:457)

India achieved independence in 1947–two years before the establishment of the People’s Republic of China. In Parthasarathy’s Chapter 5 (“Planning and the Fate of Democracy: State, Capital, and Governance in Post-independence India”), we learn that from the time of independence from British colonial rule to the decade of the 1980s, the Indian economy adopted what was referred to as a ‘mixed economy’ approach, with a regulated private sector, a large public sector, and major nationalization of financial institutions in the late 1960s and early 1970s. A wave of nationalization in the 1960s and 1970s was

10

vincent kelly pollard

followed by deregulation, privatization of a section of the public sector, and easing of entry norms for foreign capital in the 1990s. In the early 1990s, a loose coalition of big Indian capital calling itself the ‘Bombay Club’ was floated, to ask for government ‘protection’ in the face of liberalization and globalization – arising from a feeling of unpreparedness to compete with global firms after having enjoyed decades of protection from competition. Parthasarathy’s chapter links the economic transformation of the country in the post-independence period to its implications for democracy in a deeply unequal and hierarchical society. According to Parthasarathy, assaults on the poor and socially marginalized continue earlier planning policies which largely led to capital concentration in the hands of bureaucrats, big capital, and large landowners even as they systematically eroded the rights of the country’s citizens, and excluded large masses of people from the benefits of ‘development.’ Parthasarathy explains the specific Indian form of social organization which provides the base for surplus extraction and capital accumulation. Chapter 5 stresses the continuities over historically different regulatory phases. These continuities reveal the inability of Indian capital to extract surplus and accumulate purely through market mechanisms. Substantial state-owned enterprises were not new to China. They predate the Republican (1912–1949) and Communist periods (1949-present). However, Chapters 6, 7, 8 and 9 focus on Chinese state capitalism under changing political regimes since 1949. For a halfmillennium and longer, China has been home to more than one fifth of humanity—slightly more than in India. And far more effectively than the former Communist Party of the Soviet Union, the Chinese Communist Party has grounded its appeal in Chinese patriotism (Brown 2009:586, 608, 611). In 1949, the establishment of the People’s Republic of China united much of the territory previously held by the Qing Dynasty (1644–1911/1912). Under Communist Party leadership, China’s First Five-Year Plan (1953–1957) emulated the USSR, emphasizing “branch-type administration and centralization” (Schurmann 1968:176). The zenith of “vertical” top-down rule occurred “around 1954” (Ibid.:190). Even as late as 1956, China’s State Planning Commission, then “comparable to the Gosplan of the Soviet Union during Stalin’s time,” still directed “both long-range and short-range planning” (Ibid.:181) But change came quickly. In the late 1950s, the CP was experimenting with decentralization—even down to the level of production units (Ibid.:176–177; compare Mao 1977 [1956]:290,

state capitalist analysis

11

292–295). In 1957, control of light industry devolved from central government ministries to provincial governments. And by the early 1960s, “enterprise profit [had] been made a major success criterion in Chinese industry” (Ibid.:205, 297). Economic decision making in China decentralized, displaced from the national level to the provinces. Despite policy zigzags, the predominant Chinese Communist decentralization in the early 1960s was “province-level centralization.” Newly empowered “provincial cadres…began to act in a manner similar to that of the central government during the early 1950s” (Ibid.:209–210; compare Yang 1996:106–107, 242). Although state capitalism in China has loosened up considerably since the late 1970s, “in many cases, even local states that appear to fit the model of ‘local state corporatism’ may turn out to be predatory and developmental at the same time” (Saich 2002:99). In the People’s Republic of China, for example, workers have resisted workplace discipline, interfered with production, and gone on strike before, during and after Mao Zedong’s Cultural Revolution (1966– 1976), and in the Reform and Opening Up period (1978-present). With World Trade Organization pressures and current government policies since 2001, there is little reason to expect that workplace labor slowdowns and strikes will significantly subside. According to published governmental reports (and other Chinese sources), ‘publicorder disturbances’ and urban and rural workers’ protests increased from a reported 10,000 in 1994 to 87,000 in 2005. These actions went beyond peaceful protests, including wildcat strikes, riots and uprisings (Minister of Public Security, reported in South China Morning Post Staff 2005; Beech 2006:28; Kahn 2006; China Daily Staff 2006; Wedeman 2005). To the extent that these data are comparatively valid, they reflect an almost ninefold increase during that period. In Chapter 6 (“What Happened to Chinese Communism: The Transition from State Feudalism to State Capitalism”), Satya Gabriel, Stephen Resnick and Richard Wolff challenge claims on the Left and the Right that Chinese society ever was “in transition to communism.” Socialism reflected a presumed political power arrangement between workers and peasants under the control of the communist party and aimed at achieving communism. Relying on Marx’s theory of class as the organization of surplus labor, Gabriel, Resnick and Wolff claim that Chinese society prior to Mao’s death in 1976 was not socialism but rather a form of state feudalism. During the Reform and Opening Up period, “state feudalism” has given way to state capitalism. Today state

12

vincent kelly pollard

capitalism continues in China, even as private capitalism has begun to challenge the former’s once dominant position. China specialists among readers of Wrestling With Leviathan will be familiar with ongoing reforms in China’s employment law, labor administration and new types of dispute resolution mechanisms since the mid-1990s (Brown 2010). Jackie Sheehan’s Chapter 7 (“Labor Representation and Organization Under State Capitalism in China”) provides a complementary perspective. She considers the challenges facing Chinese workers and their efforts to organize themselves at the point of production. Sheehan’s discussion of tensions between state capitalism and state corporatism examines tensions between the ruling Chinese Communist Party (CCP) and urban industrial workers. For more than three decades since the late 1980s, she asks how the CCP has responded to labor pressure for better industrial and political representation. She also cautions us against exaggerating the implications of economic change in societies like China for the self-organization of the Chinese working classes (Compare Wedeman 2005). Readers familiar with Michael Leaf ’s research in Fujian Province (Leaf 2002) will be interested in the extent to which the hukou (‘household registration’) and danwei (‘workplace assignment’) systems have been disassembled in China’s provinces and special economic regions. This is an indicator of the degree to which state capitalism has retreated—or has been subcontracted to provincial and city governments. The Chinese government has resisted workers’ attempts to form independent labor organizations, instead seeking to contain an increasingly restive working class with ‘state-controlled unionism,’ even as workers express anxiety for employment security and for maintaining their standard of living. Thus the CCP’s relaxation of centralized control over a more open, ‘mixed’ economy has not been matched by a greater tolerance of autonomous labor organization. The upshot is an intensifying conflict with labor particularly in economically-disadvantaged areas of China. In Chapter 8 (“A Consideration of China’s Incomplete Retreat From State Capitalism”), Rumy Hasan reflects on the ways in which “the retreat of state capitalism” in China has affected the Chinese political system. From a state capitalist perspective, Hasan examines China’s political economy since the 1949 revolution, drawing attention to the impact of “military competition and concomitant development of the heavy industrial sectors,” the gradual retreat of state control over the economy and the adoption of a ‘dual track’ approach.

state capitalist analysis

13

Hasan proceeds to explain how the Chinese economy has achieved an unprecedented growth rate. According to Hasan’s argument, the retreat of Chinese state capitalism has led to a “reconfiguration of classes” and other unintended effects. Hasan invites the reader to appreciate how intense military competition and concomitant development of the heavy industrial sectors dictated the path taken by the whole political economy. Hasan’s chapter examines the gradual retreat of state control over the economy and the adoption of a ‘dual track’ approach. Chapter 8 analyses the factors that have led the Chinese economy to achieve an unprecedented growth rate. The resulting “reconfiguration of classes,” Hasan argues, will have profound political ramifications. Yuehtsen Juliette Chung’s blend of state capitalist analysis with ‘environmental realism’ in Chapter 9 requires a more detailed introduction. “In many ways,” according to one historian, “China’s environmental problems are now those of a ‘typical’ developing country” (Pomeranz 2000:147). Obliquely challenging earlier forms of state capitalist analysis, nineteenth-century Austrian economist Eugen von Böhm-Bawerk deconstructed the law of value, focusing on Marx’s views of nature and the environment (Böhm-Bawerk 1975[1889]:67–68, 74). That critique precedes a similar one by environmentalist activists since the 1960s and a more recent one (Tabor 2002:66–68). Indeed, as one Marxist ecologist has acknowledged (Foster 2000), environmentalist critiques by Leszek Kolakowski (1978) and others have led social movement organizations to reject the relevance of Marx’s law of value. A corollary of that debate has implications for government and corporate decision makers. In Frederick Engels’ “Preface” to the 1888 English edition of The Communist Manifesto which he co-authored with Karl Marx, its “fundamental proposition” included the following claim: the history of these class struggles forms a series of evolutions in which, nowadays, a stage has been reached where the exploited and oppressed class — the proletariat — cannot attain its emancipation from the sway of the exploiting and ruling class — the bourgeoisie — without, at the same time, and once and for all, emancipating society at large from all exploitation, oppression, class distinction, and class struggles. (Engels 1888; emphasis mine)

And, according to Engels, the “proposition” of the Communist Manifesto “is destined to do for history what Darwin’s theory has done for biology” (Ibid.). By analogy with the Social Darwinism of

14

vincent kelly pollard

nineteenth- and twentieth-century Euro-American capitalist modernization, did the conviction that the law of value is an effective covering explanation for the workings of capitalism desensitize ruling communist elites to environmentally destructive policies?4 For example, Marx asserts in Volume I of Capital, “Physical forces like steam, water &c, when appropriated to productive processes, cost nothing” (Marx 1971a [1887]:365; compare Marx 1971a [1887]:173–176, 179, 356–457, 365– 366, 475, 476, 565, 567). This “wastage” (Schurmann 1968:361) has not escaped comment (Shapiro 2001; Tabor 2001:67, 70, 72, 80, 84, 85, 88). But even for those convinced of the value of defending or rehabilitating Marx on this point (Foster 2000; Kudo 2006), explaining away environmental disasters in the Soviet Union and People’s Republic of China is a daunting task. Yuehtsen Juliette Chung’s Chapter 9 (“Chinese ‘Develop the West’ Campaigns and Their Environmental Impacts: The Post-Socialist Condition in China”) rejects the Communist Party’s claim that the PRC is “socialism with Chinese characteristics” and advocates “statecraft to serve the people.” The ‘West’ includes almost three fourths of the PRC’s land area, more than a quarter of the population, and almost nine tenths of officially designated national minorities. Chung’s chapter introduces us to the ongoing ‘Develop the West’ campaigns. These were launched by the Chinese government in 1999, embraced by regional governments, and pursued by Hong Kong entrepreneurs. Unfortunately, the local drive to rapidly catch up with China’s eastern seaboard has led local governments to compromise critical environmental standards in heavy polluting industries that have become obsolete in more developed regions and countries. Chung’s policyoriented state capitalist analysis and environmental realism highlights the need for greater emphasis on (and enforcement of) the environmental protection proclaimed by China’s top political leaders, the Ministry of Environmental Affairs (still one of the weaker central ministries), and to be more in tune with global demands for environmental

4 This question may be elaborated to account for multiple influences. One may begin by noting the domestically fatal effects associated with extreme concentrations of power in China and elsewhere globally during 1900–1987 (Rummel 1994). This could, in turn, prompt the question: If Marxist-Leninist leaders believe in the law of value, does their belief add to a sense of invincibility in a one-party monopoly rule of a country—and, consequently, leave them relatively indifferent to the impact of their decisions on the lives led by humans and other creatures affected by the quality of that environment?

state capitalist analysis

15

conservation in order to meet the local interests in socially beneficial economic development along the Silk Road. Drawing on Rumy Hasan’s characterization of state capitalism and on another by Gabriel, Resnick and Wolff, Chung’s orientation is deeply grounded in Chinese history and even Daoist in its sensibility. My Chapter 10 (“State Capitalist Aspirations and the Two-Stage Theory of Revolution in the Philippines”) also has policy implications for social activists. Three telling counterfactual statements frame the significance of this chapter. In 1971, political scientists who suggested that the United States would have to shut down its naval facilities at Subic Bay, Philippines, would have been laughed out of Naval Academy warfighting seminars. And on the Left in the early 1980s, anyone with the irreverence and temerity to suggest that the Communist Party of the Philippines (CPP) would not lead the final successful movement to drive out the dictator Ferdinand Marcos would have been greeted with skepticism. And, again on the Left, any suggestion that the CPP would not be among the prominent organizational leadership of the final successful stage of the Anti-Bases Movement to defeat an extension of a treaty with the U.S. also would have been ignored. But both reactions would have been dead wrong. Since its founding in 1968, the CPP has advocated a Two-Stage Theory while advocating as a perspective what most of the chapter authors would consider state capitalist. During thirteen and a half years of martial law (1972–1986), the CPP led struggles on behalf of impoverished agricultural workers, indigenous peoples, women, and employed urban workers. Disastrously misreading the pulse of the Filipino masses in late 1985, a narrow majority of the CPP Politburo’s Executive Committee underestimated the pace and intensity of changes unfolding on the volatile Philippine political landscape. In late 1986, one might reasonably debate the pros and cons of voting for candidate Corazon Cojuangco Aquino in the February 7th 1986 presidential election. But sympathizers and antagonists alike completely failed to anticipate the Party’s abstention two and a half weeks later from the street-level military-church-human rights coalition that dealt the final blow to the Marcos dictatorship. Hobbled by its orientation to a one-party monopoly of political power, the wouldbe state capitalist ruling Party thereby also missed an invitation to join the first extra-constitutional, post-dictatorship government in the Philippines. From the perspective of early indicators of emerging social and political trends likely to confront individuals, organizations and

16

vincent kelly pollard

political parties in future anti-capitalist social movements, Chapter 11 (“The End of the Cold War, Contemporary State Capitalist Analysis, and Future Anti-Capitalist Social Movements”) elaborates elective affinities among the contributions to this book while suggesting the implications of the differences for useful continuing debates over the best course for radical social change. It matters. Each of the contributing authors cares deeply about the real human consequences of anticapitalist social movements—past, present and future. References Afanasyev, L., N. Andreyev, M. Avsenev, et al. 1974. The Political Economy of Capitalism. Ed., Diana Miller. Moscow: Progress Publishers. Barkai, Avraham. 1990 [1977]. Nazi Economics: Ideology, Theory and Policy. Transl., Ruth Hadass-Vashitz. New Haven and London: Yale University Press. Beech, Hannah [with Bu Hua and Susan Jakes]. 2006. “Inside the Pitchfork Revolution.” Time 167(11): 28–30. 13 March. Bettelheim, Charles. 1976 [1974]. Class Struggles in the USSR. Transl., Brian Pearce. First published, Paris: Maspero/Seuil; New York: Monthly Review Press. Böhm-Bawerk, Eugen von. 1975 [1889]. Theory of Socialism-Communism: The Idea That All Unearned Income (Rent, Interest and Profit) Involves Economic Injustice—An Extract. 3rd rev. ed. South Holland, Illinois: Libertarian Press. Brown, Archie. 2009. The Rise and Fall of Communism. New York: HarperCollins Publishers. Brown, Ronald C. 2010. Understanding Labor and Employment Law in China. Cambridge and New York: Cambridge University Press. Burnham, James. 1941. The Managerial Revolution: What is Happening in the World. New York: The John Day Company, Inc. Carr, Edward Hallett. 1966 [1951–1953]. The Bolshevik Revolution, 1917–1923. A History of Soviet Russia series. Baltimore: Penguin Books. Vol. 1. Castles, Francis G. 2002. “Policy Performance in the Democratic State: An Emergent Field of Study.” Pp. 215–232 in Hans Keman (ed.). Comparative Democratic Politics: A Guide to Contemporary Theory and Research. London: Sage. Chapman, Herrick. 1991. State Capitalism and Working-Class Radicalism in the French Aircraft Industry. Berkeley and Los Angeles: University of California Press/Oxford: University of California Press, Ltd. China Daily Staff. 2006. “Riot Farmers Sentenced in S China Provi[n]ce.” People’s Daily. Online edition. . Accessed, 24 May 2006. Cliff, Tony [Ygael Gluckstein]. 1955. Russia: A Marxist Analysis. London: M. Kidron. Daniels, Robert Vincent. 1991. Trotsky, Stalin and Socialism. Boulder: Westview Press, Inc. Daum, Walter. 1994. “CLR James and State Capitalism.” Lecture. Socialist Scholars Conference. New York. April 2nd. Davis, Howard and Richard Scase. 1985. Western Capitalism and State Capitalism: An Introduction. Oxford: Basil Blackwell Ltd/New York: Basil Blackwell Inc. Djilas, Milovan. 1957. The New Class: An Analysis of the Communist System. New York: Praeger Publishers. Doherty, James C. 1997. “Socialism Without Doctrine.” Pp. 213 in Idem, Historical Dictionary of Socialism. Historical Dictionaries of Religions, Philosophies, and Movements 16. Lanham, Maryland: Scarecrow Press, Inc.

state capitalist analysis

17

Dunayevskaya, Raya. 1944a. “Teaching of Economics in the Soviet Union.” American Economic Review 34(3): 501–530. —— . 1944b. “A New Revision of Marxian Economics.” American Economic Review 34(3): 531–537. —— . 1967. State Capitalism and Marx’s Humanism or Philosophy and Revolution. Detroit: News and Letters. —— . 1973. Philosophy and Revolution: From Hegel to Sartre, and from Marx to Mao. New York: Delacorte Press. —— . 1982 [1975]. Marxism and Freedom from 1776 until Today. 4th ed. New Jersey: Humanities Press/Sussex: Harvester Press. Engels, Frederick. 1888. “Preface—The 1888 English Edition.” The Communist Manifesto. Marx & Engels Internet Archive. . Accessed 26 December 2009. Fainsod, Merle. 1967. How Russia is Ruled. Rev. ed. Russian Research Center Studies 11. Cambridge, Massachusetts: Harvard University Press. Fine, Benjamin and Laurence Harris. 1979. Rereading Capital. New York: Columbia University Press. Foster, John Bellamy. 2000. “Marx’s Ecological Value Analysis.” Review of Paul Burkett, Marx and Nature: A Red and Green Perspective (New York: St. Martin’s Press, 1999). In Monthly Review 52(4): 39–47. Friedman, Milton [with Rose D. Friedman]. 1982. 2nd ed. Capitalism and Freedom. Chicago: The University of Chicago Press. Goldfield, Michael and Melvin Rothenberg. 1980. The Myth of Capitalism Reborn: A Marxist Critique of Theories of Capitalist Restoration in the USSR. San Francisco: Line of March Publications for the Soviet Union Study Project. Harris, Laurence. 1991. “State Monopoly Capitalism.” Pp. 515–526 in Tom Bottomore (ed.), A Dictionary of Marxist Thought. 2nd rev. ed. Oxford and Cambridge, Massachusetts: Blackwell Reference. Hobson, Christopher Z. and Ronald D. Tabor. 1988. Trotskyism and the Dilemma of Socialism. Contributions in Political Science 215. New York, Westport, Connecticut and London: Greenwood Press. James, C. L. R. 1969. State Capitalism and World Revolution. 3rd ed. Detroit, Michigan: Facing Reality Publishing Company. Kahn, Joseph. 2006. “Pace and Scope of Protest Accelerated in ‘05.” The New York Times. 20 January. . Accessed 20 June 2006. Katzenstein, Lawrence C. 2003. “The Emerging Coalition for Capital Reform in Japan.” 44th Annual Convention of the International Studies Association. Portland, Oregon. 25 February-1 March. —— . 2008. “State Capitalism as a Response to Global Challenges: Market Sense and the New Economics of the State.” Critical Sociology 34(4): 599–606. Kolakowski, Leszek. 1978. Main Currents of Marxism. New York: Oxford University Press. Kort, Michael. 2006. The Soviet Colossus: History and Aftermath. 6th ed. Armonk, New York and London: M.E. Sharpe, Inc. Kudo, Hideaki. 2006. “Marx and the Environmental Problem.” Pp. 77–88 in Hiroshi Uchida (ed.). Marx for the 21st Century. London and New York: Routledge. Laux, Jeanne Kirk and Maureen Appel Molot. 1998. State Capitalism: Public Enterprise in Canada. Cornell Studies in Political Economy. Ithaca and London: Cornell University Press. Leaf, Michael. 2002. “Urban Development and the Search for Civil Society in China: A View from Quanzhou.” Pp. 179–196. In Sally Sargeson (ed). Collective Goods, Collective Futures in Asia. Asian Capitalisms. London and New York: Routledge. Lenin, Vladimir. 1964 [1917]. “State and Revolution.” Pp. 381–532 in Idem, Collected Works. Moscow: Progress Publishers. Vol. 25.

18

vincent kelly pollard

Mao Tse-tung [Mao Zedong]. 1977 [1953]. “On State Capitalism.” P. 101 in Idem, Selected Works of Mao Tse-tung. Peking: Foreign Languages Press for People’s Publishing House. Mark [pseud.]. 1997. “Cuban Economic System of the 1970s and early 80s: Cuban ‘Socialism’ Adopts the Soviet State-Capitalist Model.” Communist Voice 3(1). 1 March. . Accessed 1998. Marx, Karl. 1971a [1887]. Capital: A Critical Analysis of Capitalist Production. 3rd German ed. Frederick Engels (ed.). Transl., Samuel Moore and Edward Aveling. Moscow: Progress Publishers. Vol. 1. —— . 1971b [1894]. Capital: A Critique of Political Economy. Transl., Samuel Moore and Edward Aveling. Frederick Engels (ed.). Vol. 3: The Process of Capitalist Production as a Whole. Moscow: Progress Publishers. —— . 1973. Grundrisse. Foundations of the Critique of Political Economy. Marx Library. 1st American ed. Transl., Martin Nicolaus. New York: Random House. Melman, Seymour. 1997. “From Private to State Capitalism: How the Permanent War Economy Transformed the Institutions of American Capitalism.” Journal of Economic Issues 31(2): 311–330; republished in Briefing Paper [National Commission for Economic Conversion and Disarmament], 18 February 1997. Neumann, Franz Leopold. 1944. Behemoth: The Structure and Practice of National Socialism, 1933–1944. [1st ed.] Toronto and New York: Oxford University Press. Nicolaus, Martin. 1975. The Restoration of Capitalism in the USSR. Chicago: Liberator Books. Payne, Stanley G. 1995. A History of Fascism, 1914–1945. Madison: The University of Wisconsin Press. Pollard, Vincent Kelly. 2001. “State Capitalism.” Pp. 1594–1596 in Jonathan Michie (ed.), Reader’s Guide to the Social Sciences. London and Chicago: Fitzroy Dearborn Publishers. —— . 2004. Globalization, Democratization and Asian Leadership: Power Sharing, Foreign Policy and Society in the Philippines and Japan. Aldershot, UK: Ashgate Publishing, Ltd. Pomeranz, Kenneth. 2009. “The Transformation of China’s Environment, 1500–2000.” Pp. 118–164 in Edmund Burke III and Kenneth Pomeranz (eds.). The Environment and World History. The California World History Library (eds., Edmund Burke III, Kenneth Pomeranz, and Patricia Seed) 9. Berkeley, Los Angeles and London: University of California Press. Reed, John. 1919. Ten Days That Shook The World. New York: Boni and Liveright. Rummel, Rudolph J. 1994. Death by Government. New Brunswick, New Jersey: Transactions Publishers. Saich, Tony. 2002. “The Blind Man and the Elephant: Analysing the Local State in China.” Pp. 75–99 in Luigi Tomba (ed.) East Asian Capitalism: Conflicts, Growth and Crisis. Milan: Feltrinelli Editore Milano. Schurmann, H. Franz. 1968. Ideology and Organization in Communist China. 2nd ed. enl. Berkeley and Los Angeles: University of California Press. Shapiro, Judith. 2001. Mao’s War against Nature: Politics and the Environment in Revolutionary China. Studies in Environment and History. Cambridge and New York: Cambridge University Press. Singer, J. David. 1961. “The Level-of-Analysis Problem in International Relations.” World Politics 14(1): 77–92. Smith, S.A. 2008. Revolution and the People in Russia and China: A Comparative History. Cambridge, UK and New York: Cambridge University Press. South China Morning Post Staff. 2005. “Senior Chinese Officials Acknowledge Rising Social Unrest, But Rule Out Political Liberalization.” South China Morning Post. Online edition. 4 July 2005. . Accessed 28 May 2006.

state capitalist analysis

19

Szymanski, Albert. 1981. The Logic of Imperialism. Praeger Special Studies/Praeger Scientific. New York: Praeger Publishers. Tabor, Ronald D. 2002. “An Anarchist Critique of Marxism: Marx’s Theory of Capital, Part II.” The Utopian 2: 61–90. . Accessed 27 March 2010. Wedeman, Andrew. 2005. “Challenging Hegemony: Strategic Repression and Heterodoxy in China.” 18th Annual Conference of the Association of Chinese Political Studies. San Francisco, California. 30–31 July. Wilczynski, Josef. 1981. “State Capitalism.” Pp. 566–567 in Idem, An Encyclopedic Dictionary of Marxism, Socialism and Communism. London and Basingstoke: The MacMillan Press Ltd./Berlin and New York: Walter de Gruyter. Yang, Dali L. 1996. Calamity and Reform in China: State, Rural Society, and Institutional Change since the Great Leap Famine. Stanford, California: Stanford University Press.

CHAPTER TWO

STATE CAPITALISM VERSUS COMMUNISM: WHAT HAPPENED IN THE USSR? Satya Gabriel, Stephen A. Resnick, and Richard D. Wolff Communism and Capitalism: Private Versus State Forms A widespread conviction holds that one of the most extraordinary events of the twentieth century was the establishment of communism, first in Russia and then China. The results included a protracted struggle between contending capitalist and communist worlds. While sometimes limited to ideological and rhetorical modes, that struggle also erupted in dangerous skirmishes in Berlin, sharp and bloody conflicts in Korea and Southeast Asia, and the threat of nuclear holocaust in the Cuban crisis. After so much sustained tension and conflict, the abrupt end of communism towards the close of the century was perhaps as unexpected as was communism’s beginning near the century’s start. We do not think there was a struggle between capitalism and communism across the twentieth century. For us, communism never ended in that century because it never arose there. Our conclusion is built on the fact that communism – if understood as a distinct, non-capitalist class structure – was neither a significant, nor a sustained part of the history of any of the nations conventionally labeled communist. Using the USSR and the PRC as exemplars, we argue first in this chapter, and then in a subsequent chapter, that those nations actually displayed capitalist and feudal, not communist, class structures. We do not doubt the sincere Marxist consciousness and anticapitalist commitment of the revolutionaries who inaugurated the USSR and the PRC. However, notwithstanding their battles to establish and defend socialism and to move toward communism, they could not and did not install communist class structures as the prevailing social organization of production in either country. Instead, they established particular state forms of capitalism (USSR and PRC) and state forms of feudalism (PRC) as means to improve their nations’ economic and military strength and their citizens’ standards of living. Thus, by the

22 satya gabriel, stephen a. resnick, and richard d. wolff second half of the twentieth century, the dominant conflicts occurred among (1) mostly private capitalisms (the US, Western Europe, Japan, etc.), (2) a state capitalism in the USSR and Eastern Europe, and (3) first a state feudalism and then a state capitalism in the PRC. We begin with two sets of definitions basic to our argument. The first set concerns what we mean by class structures, while the second concerns the difference between a private and a state form of any class structure. By class structures, we mean the specific, alternative ways in which societies can organize the production, appropriation, and distribution of surplus. Here we borrow from Marx’s carefully delineated class analysis (see Resnick and Wolff 1987: chapters 3–5). A capitalist class structure typically displays a class of producers (wage laborers) who deliver a surplus (usually labeled ‘profit’) to nonproducers (employers of wage laborers in commodity producing enterprises).1 Capitalists receive the surplus from their productive laborers and then distribute it to secure the conditions of existence of a capitalist social organization of the surplus (one portion to the state for operating a legal system supportive of capitalism, another portion to managers to make sure workers are productive, still another to owners of the physical means of production to gain access to those means, and so on). Capitalism as a class structure differs from other class structures in the complexes of politics, culture, and economics that pressure and persuade wage workers regularly to produce a surplus for their employers. Instead of feudalism’s personal bonds of religiously sanctioned obligation and loyalties, or slavery’s political and cultural conditions sanctioning ownership of human beings, what typically motivates wage-workers are particular distributions of property in means of production and the impersonal conditions and constraints of markets. The wage workers’ products and their labor power itself have become commodities traded in markets. Earning their livelihoods requires first selling their labor power and then producing and delivering a surplus

1

We follow Marx in assuming that any use value produced for exchange, whether in the form of a good or a service, is a commodity. Most capitalist societies across the twentieth century, whether of the private or state sort, have relied upon private markets or planning bodies or combinations of both to produce a set of prices for commodity inputs and outputs. In the case of commodities produced under planning conditions, such as that which operated in the state capitalism of the USSR, we call their values (and prices) ‘administered values (and prices).’ For further discussion, see Resnick and Wolff 2002:92–94.

state capitalism versus communism

23

to their employers. In non-capitalist class structures, surplus producers are usually personally bound or legally tied to their work places and to the individual receivers of their surpluses. By contrast, in capitalist class structures, surplus producers are free to sell their labor power in the market to any employer and to move from one to another. The distinction between feudal bondage and slave-ownership, and free, in this sense, will operate as a short-hand to differentiate non-capitalist from capitalist class structures. In contrast to all three forms of exploitative class structures (feudal, slave, and capitalist), communism represents a radically different organization of the production, appropriation, and distribution of the surplus. In the communist class structure, the individuals who produce the surplus are identical to those who appropriate and distribute it. As Marx once said: “they [the workers] themselves appropriate this surplus either of the product or the labor” (Marx 1971:255, Marx emphasis; see also Resnick and Wolff 2002:3–50, for a reading and critical evaluation of the Marxian and utopian literatures on communism, and Resnick and Wolff 1988, for the difference between a communist class structure and communism as ‘classlessness’). The collective of workers appropriates its own surplus and then distributes portions of it to other people for providing the conditions of existence of such a communist arrangement of production (for example, to a political party that promotes the virtues of communism, to a state apparatus that protects it, to managers and technicians who advance its technology and productivity, and so on). Quite parallel to what occurs in any class arrangement, these receivers of distributed portions of communist surplus labor may secure various forms of these conditions of existence. These range from religious to secular belief systems, from democratic to despotic government, from low to high technology, and from small to large producing units. Such different forms point to the immense number of possible variations of communism.2 A private form of any class structure is one where the individuals occupying class positions – and especially the positions of appropriators/distributors of the surplus – are not officials, functionaries, or employees of any state apparatus. In contrast, a state form is one where individuals occupy class positions in their capacity as state officials or 2 These variations are discussed in some detail in Resnick and Wolff 2002, 51–81. There it is explained why a communist class structure cannot be assumed to be feasible only in so-called ‘primitive communisms.’

24 satya gabriel, stephen a. resnick, and richard d. wolff their appointees. The histories of both capitalist and non-capitalist class structures exhibit mixtures of private and state forms. In most conventionally designated ‘capitalist countries,’ those private capitalist enterprises prevailed whose producers and receivers of the surplus held no position within any state apparatus. Yet state capitalist enterprises usually also existed in those countries: often, state officials or their appointees received the surpluses generated by wage laborers within some commodity producing enterprises. In the US, for example, state capitalist class structures have existed, among other places, in the Post Office, the Tennessee Valley Authority, municipally owned utilities, state universities, public radio and television, and Amtrak. Conversely, what prevailed in the USSR were state capitalist enterprises alongside a marginal social role for private capitalist enterprises. Soviet industry was mostly organized as state-owned enterprises where state officials received and distributed the surpluses produced by wagelaborers. In agriculture, significant numbers of private capitalist enterprises were sometimes allowed; likewise, in the USSR’s second or underground economy, private capitalists also existed, albeit illegally. In societies where feudal class structures prevailed (e.g., medieval Europe) there were likewise mixtures of private and state feudal enterprises. Many feudal lords appropriated the surpluses produced by their serfs on their private manors. Such feudal lords and serfs held no position in any state apparatus. When nations and national states emerged in feudal Europe, feudal kings appropriated their serfs’ surpluses on state feudal manors. Indeed, the Russian Czars received the surplus from serfs working state lands alongside the private feudal class structures on the private manors of the Russian feudal lords. Similarly, where slavery appeared, there too were mixtures of private and state slave estates. For example, in imperial Rome slave masters appropriated surplus produced by their slaves on private estates while Roman emperors appropriated slaves’ surpluses on their state estates. State Capitalism: Preliminary Considerations Across the twentieth and into the twenty-first century several strategies arose to deal with periodic crises that afflicted private capitalism. Those strategies ranged from limited episodic state interventions into the economy through various more or less sustained Keynesian counter-cyclical fiscal and monetary policies, on to full state capitalism

state capitalism versus communism

25

(through state take-over of private capitalist enterprises). For complex historical reasons, some or all of these strategies incurred the label ‘socialist.’ However, none of these state interventions achieved a change in class – that is, surplus –organization of production to communism. No society has yet reorganized most or even many of its enterprises such that the productive laborers within them are also the collective appropriators and distributors of the surpluses they produce. What the Soviet revolution did achieve was a transition from the prevalence of private capitalism to that of state capitalism instead. This transition was associated with particular redistributions of wealth and power and particular cultural shifts (e.g., hostility to organized religion). Therefore, the events of 1917 and later, in the USSR, challenged and frightened many within societies where private capitalist class structures still prevailed. They reacted by criticizing the USSR as the actualization of ‘communism,’ that evil ‘other’ of capitalism that they had long demonized as a godless, dictatorial, and unworkable dystopia. The critics lacked the conceptual distinction between private and state forms of capitalism summarized above. They reasoned instead in terms of an epochal contest between capitalism (defined as private owned enterprises interacting with workers and one another in markets) and communism (defined as state owned enterprises and workers whose interactions were subject to state planning). In the years after 1917, the survival and then economic growth of the USSR greatly expanded its prestige and influence among advocates of socialism and communism. After Stalin’s consolidation of power in the late 1920s, Soviet society was officially described as an actually existing socialism whose goal was an eventual transition to communism (the latter defined as a kind of egalitarianism which took “from each according to his ability” and distributed output “to each according to his need”). The USSR, after 1928, thus defined itself as socialist, and socialism as the opposite of capitalism. Cheerleaders and critics alike ignored or excluded the concept of state versus private capitalisms in relation to what existed in the USSR. Nearly everyone viewed the global contest of the twentieth century as capitalism versus socialism. Two related patterns of Cold War debates warrant attention. First, anti-Soviet literature referred mostly to ‘communism’ for what existed in the USSR, Eastern Europe, China, Cuba and so forth. In contrast, pro-Soviet literature mostly referred to ‘socialism’ for these countries, and communism as a future goal. Cold War debates thus often

26 satya gabriel, stephen a. resnick, and richard d. wolff resembled dialogues between those speaking different languages. Secondly, serious disagreements among the critics of capitalism entailed competing claims to the term ‘socialism’ and thus a proliferation of different meanings. For example, critics of both private capitalism and the USSR’s socialism, developed terms like ‘democratic socialist’ and ‘social democrat’ to designate those qualities and limits of state intervention (e.g., Sweden, Germany and France after World War Two) that they preferred in their definitions of ‘socialism.’ In this chapter, we use ‘state capitalism’ to refer only to societies where the state form of capitalism prevails, where state officials appropriate most surpluses. We avoid use of the term socialism not only because of its multiple and clashing usages, but also because they mostly distract attention from what we focus on, namely the organization of the surplus (which is the analytically useful definition of class we draw from Marx). One final conceptual problem needs a brief discussion to clear the way for our analysis of state capitalism: the difference between power analyses of society and class analyses. Most discussions of the USSR, by its friends and its foes, tend to collapse class and power into virtual synonyms. Class becomes a matter of power (rulers versus ruled) and so class analysis becomes the analysis of who rules whom, how, and with what consequences. In contrast, we distinguish power processes – how authority and control are distributed and wielded in society – from class processes – how surplus is produced and distributed. Of course, power and class processes are interdependent: who has power is affected by who gets surplus and so on. However, their interdependence is no warrant for conflating them any more than the interdependence of culture with both class and power entails losing the specific difference of cultural from political and class processes. Lenin seemed to recognize the difference between class and power processes. For example, not long after the 1917 Soviet revolution, he admitted that the state’s control of production and distribution (and hence the surplus) was a ‘state capitalism’ but, he argued, it was a step toward communism because state power was in the hands of workers (organized in the Communist Party) committed to using their power to that end (Lenin 1965:349). Lenin thus deployed a complex analysis that related, but also kept distinct, power and class processes. Very few of Lenin’s critics or followers followed him in this kind of analysis. Instead, most collapsed power and class together, usually in analyses that focused mostly on power as if it subsumed class. Thus, Cold War debates raged over who really wielded power in the USSR. Its critics

state capitalism versus communism

27

depicted the USSR as a society in which an elite wielded dictatorial power and then argued either (1) that it was therefore not socialist, or (2) that socialism was inherently a dictatorial system as proved by the USSR. Similarly, many socialist critics of the USSR focused on its social distribution of power to argue that Soviet socialism, because of the power concentrated in the Party and the state bureaucracy, was a distorted and/or incomplete kind of socialism whose passage toward communism was thereby blocked. Trotsky and his followers criticized the USSR’s concentration of power in its bureaucracy (state and party), yet they hesitated to label it state capitalist because of the successful collectivization of industrial capital and establishment of state planning (Trotsky 1972:245–249). Debate turned on which of two tendencies was stronger: a tendency toward capitalism arising from concentrated power in the hands of state bureaucrats, versus a tendency toward communism arising from collective power over capital and distribution. For Trotsky and some of his followers, the Soviet resolution of the two tendencies produced, at best, a society “halfway between capitalism and socialism” (Trotsky 1972:255) – often designated by ambivalent labels such as “statism” or “state socialism.” For the few critics of the USSR who made use of the term “state capitalism,” they clearly meant it to designate an undemocratic distribution of power and not any particular social organization of the surplus, not a particular “class structure” in our terms (Resnick and Wolff 2002:104–129). State Capitalism: Basic Analysis To analyze state capitalism in the USSR, our class-focused approach asks first who produced and who received and distributed the surplus. Our second basic question asks how the USSR’s specific class structure influenced and interacted with its other economic processes and with its political (i.e., power) and cultural processes. The first step in our answer – developed further below – holds that industrial workers in the USSR produced a surplus for others, namely state officials who received and distributed that surplus. The second step must explain why those workers within state industrial enterprises performed surplus labor and delivered its fruits to these officials, especially in a society suffused with denunciations of capitalism. Why did they accept working within a capitalist class structure?

28 satya gabriel, stephen a. resnick, and richard d. wolff The answer to this second question concerns all the processes other than class (political, cultural, and economic) that literally influenced, shaped, and pushed them into doing so. Marx’s Capital, particularly vol. 1, is filled with reasons explaining why workers accepted the class position of surplus producers for their employers within private capitalist enterprises. Marx there depicts the causal – literally the constitutive –force of power, culture, and economic processes in making workers produce surpluses for their employers. Workers’ class behavior in private capitalism depends on the existence of all those non-class processes. In a parallel way, workers will produce surplus for state capitalists if and when political, cultural, and economic processes pressure and persuade them to do so. Soon after the 1917 Soviet revolution, a small group of officials in a state agency (Vesenkha), reorganized as the Council of Ministers (COM), became in fact the receivers and distributors of the surpluses that workers produced in state industrial enterprises. The COM functioned as state capitalists because the economic, political, and cultural processes of the early USSR situated and legitimated them in that class position. Those processes included the passing of specific Soviet laws, their enforcement by the government, and their adjudication by Soviet courts; the design and dissemination of officially approved ideologies; the activities of the communist party; the planning of the economy by an economic bureaucracy; the design and implementation of school curricula; and so on. Together, they placed the COM in the actual social position of first receiver of the surpluses produced in Soviet industrial enterprises. Those enterprises were owned by the Soviet state, the productive workers in them were paid wages for their labor, and the appropriators of the surplus produced by those workers were the state officials appointed to the COM. It was the state capitalist counterpart of a private capitalist board of directors. Sovietologists recognized this parallel, albeit without class analysis, in depicting the USSR as an economy that functioned as if it were one giant industrial combine (Nove 1989:viii and 77; Gregory 1990:26). Official Soviet understandings of socialism and communism worked, ironically, to render a state capitalism acceptable to the surplusproducing workers. The USSR was depicted as having achieved socialism because it had collectivized the ownership of means of production (by dispossessing the former private owners), made the state – as the workers’ representative – the owner and operator of productive

state capitalism versus communism

29

enterprises, and because the state’s central planning replaced markets. Workers’ wages were said to be their fair share of the collective output. Workers contributed to the building of ‘their’ socialism by enabling rapid capital accumulation, industrialization, and a military capable of protecting the USSR from hostile ‘capitalist’ nations. These conceptions of Soviet socialism, promoted by the state and party in schools, factories, and the media, persuaded workers to produce surpluses for the COM. Workers therefore did not conceive of themselves and the COM as producers and receivers, respectively, of the surplus. They did not, with some exceptions, see themselves locked into that antagonistic relation Marx called ‘capitalist exploitation.’ Rather, they were partners (with their managers, state officials, Party officials, and others) in a worker-controlled (i.e., socialist) economic system serving the entire people. From this perspective, Soviet workers rather resembled their counterparts in private capitalisms. In both state and private capitalism, different ideologies nonetheless shared an insistence on not conceiving workers and capitalists as surplus producers (exploited) and surplus receivers (exploiters). They shared a concept of production in which there is no surplus since all contributors to output get back a share equal to their contribution: production and distribution as sites where justice reigns. The wage–labor system of the Soviet economy also reflected its culture and politics. The COM functioned as the legal personification of collectively owned means of industrial production deployed within state industrial enterprises. Through its subordinated enterprise managers, the COM hired the workers, provided them with collectively owned means of production (tools, equipment, and raw materials), and received the industrial surpluses. The COM then distributed those surpluses. Of course, the power to influence the size of the surplus and what portions were distributed to which others was shared by various social groups (Party leaders, state bureaucrats, trade unions, and so on). While that shared power was more or less continuously contested among those groups, the class positions of industrial workers (as surplus producers) and the COM (as its receivers) were not. Concepts of class and surplus had been successfully banished from the consciousness of most Soviet citizens in part because their relevance to Soviet society had been expunged from officially sanctioned discourse. In Soviet state capitalism, the COM employed, in addition to productive workers in its factories, a vast central managerial bureaucracy (Gosplan). Like its managerial counterparts in private capitalist

30 satya gabriel, stephen a. resnick, and richard d. wolff corporations, this central management was responsible for supervision, record-keeping and so on, for the state capitalist enterprises. For example, using a kind of labor theory of value, Gosplan assigned values to inputs (labor power and means of production) and outputs. Gosplan then calculated the total difference between inputs and outputs (at their assigned values) to arrive at the surplus value received by the COM and thus available for it to distribute (to the state, the party, for capital accumulation, etc.). The COM then distributed the surplus (in portions and to recipients that were both subject to the varying powers of the Party, state bureaucracy, trade unions, and so on). The official goal was to reproduce and expand Soviet state capitalism. The COM also employed and depended on a huge decentralized managerial bureaucracy located within state enterprises at local and regional levels. These managers supervised and disciplined the USSR’s everexpanding industrial work force. They pressured and persuaded workers to raise the productivity and intensity of their labor so as to maximize surpluses delivered to the COM. Because both centralized and decentralized managerial activities were deemed indispensable to the reproduction and expansion of Soviet state enterprises, the COM distributed significant portions of the surpluses to managers as their salaries and managerial budgets. The COM distributed other portions of the surpluses to political leaders in the state and the party, educators in the schools and universities, military and police apparatuses, and so forth. Like the managers, these groups were directed to use the surplus shares distributed to them by the COM to maintain their activities in providing the cultural, political and economic conditions for a growing state capitalist industry. These activities included, among others, the administration of state-managed markets, the assignment of values to resources and products, the allocation of resources and products to enterprises and consumers, the social dissemination of officially sanctioned theories, and the operation of the legislative and legal systems. A particularly important distribution of the surplus by the COM went to provide free or subsidized housing, education, medical care, transportation, etc. This collective consumption program proved crucial to the workers’ sense that the Soviet system was a genuinely ‘workers’ society’ or ‘socialism.’ Soviet agriculture developed differently. Soon after the 1917 revolution and throughout the 1920s a so-called ‘ancient class structure’ prevailed – farms where self-employed Soviet farmers produced and

state capitalism versus communism

31

appropriated their own individual surpluses (Gabriel 1990). Under Stalin’s forced collectivization in the late 1920s and into the 1930s, these ancient farmers were replaced by collective farms some of whose class structures conformed to what we would define as communist: the collectivity of farmers who produced also appropriated and distributed the surpluses.3 Then in reacting to the recurrent crises arising in these newly established communist farms, Stalin sanctioned the reintroduction of the very ancient class structure he had effectively destroyed under collectivization. Operating as private household plots alongside and, to a degree, in competition with communist farming, the ancient class structure prospered, although various state restrictions continued to constrain and frustrate its functioning. Under Stalin, state capitalism also extended to agriculture in the form of newly established state capitalist farms (recall that collective farms were private; they, and not the state, owned their land). On those state farms, unlike the different class situation in ancient-communist agriculture, the COM appropriated the surpluses produced by state farmers much as it appropriated the surpluses of workers in state industrial enterprises. A Brief History of Soviet State Capitalism4 From its beginnings, Soviet state capitalism had a basic problem. It could not generate sufficient surpluses to fund all the distributions needed for it to survive and grow. The inherited backwardness of

3 We explain elsewhere the different set of political, cultural, and economic processes operating in the USSR that enabled the collectivity of farmers living and working on these collective farms to first receive and distribute the surpluses they produced (Resnick and Wolff 2002:243–257). We also discuss there the paradox this newly established communism in agriculture posed for state capitalism in industry: because collective farmers and not the COM were the first receivers of the surpluses, the COM had to figure out ways and means to tap those surpluses to foster its different state capitalist aims. This contradiction between state capitalist industry and communist and then communist/ancient agriculture continued throughout the history of the USSR. Indeed, it also surfaced inside collective farms when its leaders functioned as selfreproducing surplus appropriators and relegated others to the de-facto role of surplus producers. From the beginning ‘collective farms’ was a term that could and did include both communist and exploitative class structures. 4 Our interpretation of this history is based on a reading of a vast literature on the USSR. Particularly important to us were those writers – some Marxist (Baykov, Dobb, Carr, Bettelheim) and some not (Nove, Davies, Cohen, Gregory and Stuart) – whose interpretations provided us with materials and research closely related to our class as surplus perspective.

32 satya gabriel, stephen a. resnick, and richard d. wolff Russia; the repeated destructions of World War One, the revolution, the civil war and then World War Two; the enmity of private capitalist nations; and the desires of Soviet citizens for rising living standards placed demands on COM that required the distribution of more surplus than state capitalist enterprises could generate. Soviet leaders responded to this basic problem by committing the surpluses received by the COM first and foremost to expanding industrial capacity thereby generating rising surpluses over time (Resnick and Wolff 2002: chapters 8–10). The prioritization of industrial capital accumulation left relatively little surplus available for all the other needed distributions of the surplus. Indeed, not only was little surplus invested in Soviet agriculture, but planners manipulated the ratio of industrial to agricultural output prices to siphon wealth from agriculture. In effect, industrial surpluses went mostly to industrial expansion while agricultural surpluses as well were diverted to the same purpose.5 A relatively stagnant agriculture coupled with an industry bent more on its own expansion than on producing consumer goods meant that living standards rose slowly and sometimes not at all. What surpluses did not go for industrial expansion went mostly to expand the Soviet military and to state bureaucratic and communist party apparatuses. The latter were increasingly necessary to control a fast-rising population of industrial workers whose living standards were severely constricted. Remarkably, a program of carefully nurtured revolutionary zeal and workers’ self-sacrifice, coupled with Stalinist controls, succeeded in enabling rapid industrial growth despite low living standards and spreading social controls. ‘Building socialism’ – as this program was officially labeled – became an effective slogan for the recovery from world war, revolution, and civil war, through the traumatic collectivization of agriculture in the 1930s, the cataclysm of World War Two, and then the Cold War. But by the 1970s, the old slogans and program no longer sufficed to contain the contradictions besetting the production and distribution of state capitalist surpluses.

5 We explain elsewhere how the well-known movement of the terms of trade against agriculture and in favor of industry can be recast in Marxian class and value terms as a set of unequal exchanges between state capitalists and ancient farmers through the 1920s (the New Economic Policy period), and then communist/ancient farmers from the 1930s onward (Resnick and Wolff 2002:213–222 and 243–257). These exchanges enabled the COM to gain extra revenues at the expense mostly of communist farmers. Those extra revenues were added to surpluses appropriated from industrial workers.

state capitalism versus communism

33

Long deferred mass demands for rising living standards and freedom from harsh social controls, sharpened by the suppressed 1968 reform movements, particularly in Czechoslovakia, could no longer be contained. Meanwhile, the arms race required spiraling military outlays. Soviet industrial workers in state capitalism rejected and began to openly struggle against repetitions of the classic appeals for more work, more sacrifice, and higher productivity (i.e., rising surpluses). The old slogans fell on deaf ears. Soviet agriculture could not be further squeezed. Collective farmers resisted by shifting their efforts from collective farming to their individual ancient plots. In our class terms, Soviet state capitalism’s contradictions coalesced into a full blown crisis. The increasingly open resistance of industrial workers and collective farmers constrained the industrial surpluses that the COM could appropriate from state enterprises and likewise the portions of agricultural surpluses that state could siphon through manipulating the terms of trade between industry and agriculture. Yet the survival of Soviet state capitalism – and the USSR itself – required ever larger surpluses to fund the ever larger distributions designated as ‘building socialism.’ Without more revenues (surpluses and agricultural wealth) to distribute to secure the conditions of Soviet state capitalism’s growth and without any way to reduce the demands on those revenues, the slowdown that occurred after the mid-1970s deepened in the 1980s, and eventually led to a social collapse of Soviet state capitalism (and the USSR as a political unit) at the decade’s end. In a further irony, because Soviet leaders from Stalin forward had declared their system to be ‘socialism en route to communism,’ the crisis and collapse of their economy was conceived not as a crisis of a state form of capitalism but instead as the failure of socialism. Large numbers of Soviet citizens and an apparent preponderance of Soviet leaders seemed unable to imagine any other solution than movement back toward a private form of capitalism. No other option seemed practically available. The shift back to private from state capitalism was – and still is – nearly universally viewed instead as a transition from socialism to capitalism. Oscillating Between State and Private Capitalisms The recent transition from state to private capitalism in the USSR and elsewhere is only one moment in a much longer history of repeated

34 satya gabriel, stephen a. resnick, and richard d. wolff oscillations between the two around the globe. The class history of Russia is illustrative. The abolition of feudalism in 1861 gave way to a massive ancient class structure in agriculture interacting with a smaller but more rapidly growing private and state industrial capitalism (under the czar as a singular state capitalist appropriator). The contradictions within and among these different class structures yielded the 1917 revolution. Because of the conceptual lens through which participants (and especially the party that took power) looked at Russian society and the revolution, the latter came to be understood as the socialist/ communist replacement for a fundamentally unjust and harsh capitalism. The new society would respond to the needs and desires of desperate farmers in ancient agriculture and poverty-stricken workers in capitalist industry. In actual class terms, the new society was anything but communism. It continued both capitalism in industry and the ancient class structure in agriculture. But the form of that capitalism in industry was different: now a few Soviet state officials, organized eventually into the COM, became the appropriators of the surpluses produced by Soviet workers. What changed was not the capitalist class structure but rather who appropriated capitalist surpluses: state officials replaced private boards of directors elected by shareholders, etc. Now this change from one form of capitalism to another in industry occurred together with, and was connected to, major changes that evolved in the class structures within agriculture and changes that followed in many of the non-class processes comprising Russian society. As noted, ancient farms gave way to collective farms (exhibiting shifting combinations of communist, ancient and other class structures). Among non-class processes, there were, for example, major changes in how resources and products were distributed socially. For example, private markets first disappeared (under War Communism) only to reappear thereafter (under Lenin’s New Economic Policy) and then once again disappeared (under Stalin’s collectivization of agriculture and rapid industrial expansion) only to be reintroduced but a few years later, albeit on a limited scale, to support the reintroduction of ancients in agriculture. These particular shifts between market and non-market mechanisms of distributing resources and products helped to support the emerging Soviet state industrial capitalism, even as they also introduced new contradictions threatening its continuance. Similar shifts in countless political and cultural processes worked their contradictory effects on Soviet state capitalism. For many decades under enormous pressures, the contradictions were sufficiently managed by citizens and

state capitalism versus communism

35

leaders to enable the USSR and its state capitalism to survive, recover from wars, and grow. Eventually, however, Soviet state industrial capitalism encountered a crisis – the aforementioned imbalance between the COM’s appropriation of the surplus and the ever-growing demands on it – that produced the transition to private capitalism that continues, albeit unevenly, today. This history of the capitalist class structure of industry – changing from being mostly private capitalist in pre-revolutionary Russia to state capitalist in the USSR to once again mostly private capitalist in Russia today – represents what we mean by our oscillation thesis. The contradictions and resulting crises of one form of capitalism produces its other as the posed ‘solution.’ This oscillation seems to characterize capitalism always and everywhere. Consider, for example, the US, the supposed antithesis of the alleged communist USSR. What is its capitalist history? US capitalism certainly was and remains marked by relentless cycles of business ups and downs, sometimes extreme, usually with costly social consequences. It exhibits decades of growing inequalities of income followed by remarkably more egalitarian periods that give way yet again to years of growing inequality. Long periods of discrimination practiced against ever-changing ethnic, racial, and gender populations have been followed by years of their integration into the economy followed still again by periods of discrimination against yet new migrant populations. Such aspects of US history have generated all sorts of social problems, conflicts, and even threats to US society. The US state apparatus has often intervened trying to manage what it deemed to be their unacceptable, socially disruptive consequences. Where it could, it sought to solve the underlying problem, resolve the conflict, or eliminate the threat. For example, the US state repeatedly intervened in the economy to shape, limit, or control its functioning. Particular objects of those economic interventions were business cycles, extreme inequalities of income distribution, and extreme inequalities of power (e.g., monopolies). The US state, through its many different agencies, repeatedly tried to manage US capitalism especially when its instability provoked or threatened to provoke political protest. For example, starting in 2008, the US state pumped trillions of dollars into the private sector aimed squarely at helping it to recover and prosper. Fearful of potential political consequences emanating from a combined economic and financial meltdown of capitalism, the state

36 satya gabriel, stephen a. resnick, and richard d. wolff intervened radically as it had done in the Great Depression of the 1930s. Thus, in 2008 and 2009, the US state used tax revenues and borrowings to take majority ownership of the nation’s largest banks and its largest insurance and automobile enterprises. Such actions clearly represent a new New Deal for US capitalism that goes beyond even what FDR’s administration undertook to save the capitalism of his day. The US state has thus reverted (oscillated) to a surge in state capitalist enterprises as its preferred way of coping with an extreme crisis in its private capitalism. How far this oscillation will go and how long it will last is uncertain. In addition to its interventions mobilized to control, limit, and offset cyclical instability, the state has contributed to and actively stimulated the overall growth of private US capitalism. At all three levels (federal, state, and local) government adds to the nation’s aggregate capital stock via its infrastructure expenditures on roads, harbors, airports, canals, river ways, dams, and public sanitation systems as well as to human capital stock via its massive educational expenditures. Government helps to create new technology through many of its agencies, military and civilian. Such state expenditures have generated entirely new industries deploying new forms of technologies (air travel, computers, radar, micro electronics, pharmaceuticals, new metals, new forms of energy, and so forth) organized as private capitalist enterprises. The state even helps to shape the supply of land for farming as well as increase the supply of so many other needed resources including water, coal, oil, electricity, timber, and nuclear energy. Do the periodic US state interventions (targeting cycles and crises) and/or the more or less continuous interventions (providing crucial infrastructural investments, etc.) represent a movement toward socialism and away from capitalism as some claim? The answer depends on the theoretical lens used to define and differentiate capitalism from socialism (or communism). The answer is yes, if one’s definition, one’s theoretical focus holds state economic intervention and activity, per se, as inherently anti-capitalistic and therefore either as socialism or a stepping stone thereto. The answer is no if one’s definitions – as we argue here – focus on the surplus: who produces, appropriates, and distributes the surplus (what precise form does the organization of the surplus take). From our class-qua-surplus perspective, the US state’s economic interventions listed above have nothing to do with socialism or communism. Rather, they represent varying combinations of private and state forms of capitalism responding to the specific needs and

state capitalism versus communism

37

instabilities of the capitalist class structure that has so far endured as the socially prevalent class structure in the country. Oscillating between more and less state intervention, more and less state capitalism, is precisely the history of US capitalism. US class history differs from Russian history only in the degree of oscillation, not in the fact or kind of oscillation. The US oscillated toward less state capitalism and mostly for shorter durations, whereas the USSR experimented for several decades with state capitalist appropriation in almost all its industry and significant portions of its agriculture. Russia and the US are much more similar in their respective states’ shared history of imposing, then eliminating, then imposing yet again many state controls over markets, productive property, and power. A Postscript on the USSR and Communism What might an actual communist alternative have looked like within the USSR? Within our surplus framework, a communist class structure is defined as an arrangement of production such that the workers who produce a surplus are also, collectively, the persons who receive and distribute that surplus. This collectivity of workers presumably distributes their own surplus in ways aimed to secure the conditions for this communist class structure to survive and grow. Such a communism’s contrast with state capitalism is stark and clear. While the collectivity of workers produces surplus alike in capitalism and communism, only in communism does that same collectivity also receive and distribute the surplus. Perhaps we can conclude by reposing and answering this basic question: does an examination of the class history of the USSR show that the collectivity of their productive industrial workers received and distributed their own surpluses? We find clearly that they did not. However, if we ask the same question of productive agricultural workers in Soviet collective farms, we think that many of them did. Strangely enough, Stalin eventually squeezed and undermined the very communism his collectivization drive had earlier fostered in agriculture. Soviet agricultural communism was constricted to force feed the growth of state capitalism in industry. Thus communist class structures never existed in the USSR on a society-wide basis, despite claims to the contrary made by friends and enemies alike for decades. At the same time, the communist class structures that were developed in some parts of

38 satya gabriel, stephen a. resnick, and richard d. wolff Soviet agriculture for some time – until Stalin sacrificed them – left clear traces of their viability. Similar signs of the viability of communist class structures appear in the history of the collective farms developed in several Eastern European societies after 1945. References Gabriel, Satyananda. 1990. “Ancients: A Marxian Theory of Self-Exploitation.” Rethinking Marxism 3(1): 85–106. Gregory, Paul. 1990. Restructuring the Soviet Economic Bureaucracy. Cambridge: Cambridge University Press. Lenin, V.I. 1965. Collected Works. Vol. 27. Moskow: Progress Publishers. Marx, Karl. 1971. Theories of Surplus Value. Part 3. Moscow: Progress Publishers. —— . 1977. Capital: A Critique of Political Economy. Vol.1, trans. B. Fowkes. New York, NY: Vintage. Nove, Alec. 1989. An Economic History of the USSR. London: Penguin. Resnick, Stephen and Richard Wolff. 1987. Knowledge and Class. Chicago: University of Chicago Press. —— . 1988. “Communism: Between Class and Classless.” Rethinking Marxism 1(Spring): 14–48. —— . 2002. Class Theory and History: Capitalism and Communism in the USSR. New York and London: Routledge Press. Trotsky, Leon. 1972. The Revolution Betrayed. New York: Pathfinder Press.

CHAPTER THREE

LABOR, EXPLOITATION AND CAPITALISM IN RUSSIA BEFORE AND AFTER 1991 Michael J. Haynes Introduction Russia was and is a problem. It is a problem to know what is going on there and it is a problem to know how to understand the path of its development in theoretical terms. What categories and ideas do we use to organize our understanding of how this society has changed and is changing? As the core part of the USSR, or the Soviet Union, events in Russia helped to mold the twentieth century – revolution in 1917, dictatorship and terror under Stalin, global war between 1941 and 1945, and global cold war from 1945 to 1989–1991. These events focused attention on the question of what kind of society existed there and the resulting debates, for good or ill, helped to shape our understanding of the world. Then, in the 1990s, the old USSR collapsed. Russia emerged from the fragments as a weakened great power with a rusting heap of nuclear weapons. Its ticket of admission to the G7 of rich countries, to make it the G8, seemed a gesture towards its past and the continuing fear of its now nuclear arsenal. But, following the economic crisis of 1998, the Russian economy began to recover. Buoyed by the rising price of oil, a new confidence appeared and there was a sense of a strengthening recovery amongst Russia’s rulers and a hope that at a distant point in the future they might be able to regain some of Russia’s old position. But the frissons this created in the West were limited. Behind the bravado Russia remained economically weak and dependent. Moreover, optimism was punctured in 2008 as the world economy slumped and the price of oil fell. If Russia had a past, people asked, does it have a future? And the ‘Russian question’ – the debate on the left about what was going on there and how it could be made sense of – should that, too, be confined to the archives, the dusty museum of problems once bitterly fought over but now of interest only to intellectual historians who struggle to understand the passions involved?

40

michael j. haynes

Perhaps not. The debate was only ever partly about ‘Russia.’ The bigger question, though often submerged, was whether could Russia be fitted into the existing categories and where did one start to answer that question? In other words, it was really a debate about the nature of capitalism and, in particular, the relationship of capitalism and the state, because in Russia, throughout its history, the state was always a prominent actor. Here was a land, noted the great historian Kliuchevski, of an earlier era, where the state grew fat as the people grew thin. The phrase became even more applicable to the USSR for much of its history (Gerschenkron 1962: 164). Mainstream writing in the west solved the problem of how to categorize Russia by drawing a line between capitalism and the state. Russia, as the Soviet Union, was a state controlled society and so it became the antithesis of capitalism as socialism. The transition then became a shift from socialism to capitalism. The fact that Russia was a repressive state and that its socialism so obviously failed, made the argument all the better because it discredited the idea of an alternative to capitalism in the present and the future. This view still dominates and not least in Russia itself. But a critical left, which did not follow the official pieties of the Cold War, always took the view that Russia was not socialist in any model sense. For some, there was socialism of a kind, but a very weak and degenerate form. Others went further and argued that Russia could not be put into the categories of either capitalist or socialist and that it was some third form, a sui generis entity with a logic (or lack of it) of its own. Still others took the view, as I do here, that it was a form of state capitalism so that the transition becomes a change of form rather than essence (Linden 2007). Notice what this debate involves. There is a dispute about what is happening inside Russia, but there is also a debate about how Russia’s development was, and is, related to the nature of global capitalism as a whole. Is Russia outside of this system, inside/outside or completely inside? Cleary there are differences between Russia and other parts of the global economy but no two states are ever identical. There are, after all, varieties of capitalism. The questions remain – what determines how societies are differentiated, is the differentiation structured in any way, and what are the limits to this differentiation beyond which a part becomes so separate that it can no longer be understood in terms of the whole? These questions must be answered dynamically because if capitalism is differentiated in place – between the 200 or so different

labor, exploitation and capitalism in russia

41

states in the world today – it is also differentiated in time over the several centuries it has existed. Unfortunately, some of the more critical accounts of the nature of Russia, either side of 1991, converge more closely with the mainstream than their authors like to admit. Conventional economics is an axiomatic science building its propositions on a seemingly logical analysis of markets. Market imperfections appear as deviations from the ideal. Instead of concentration, monopoly, protection, state action etc. being seen as the expression of the direct essence of capitalism, they appear as aberrations of the pure market model. At first glance, more radical approaches might seem to avoid this. But this is far from true. Often starting with a bowdlerized version of volume one of Marx’s Capital, they too tend to conceive of capitalism in terms of private property, markets and commodity production. Thus unwittingly, mainstream and many critical accounts share the same blind spots, not the least of which is “an aversion to serious investigation of the role of the state in economic development” (Wade 1992:284). This has a double consequence. It leads to the state being thought of as outside of the system – the state is necessary to capitalism but it is not of capitalism. Beyond a certain point, its expansion undermines capitalism and transforms it into something else. It also leads to a failure to take seriously the central role that the state has played both directly and indirectly in the development of global capitalism. This also retards an engagement with the historical institutionalist literature on capitalism. This problematic location of the capitalist state is of long standing. But during the Cold War it was re-enforced by the idea that this was a conflict of two systems – capitalism and non-capitalism, defined by the relative balance of state and private property, plan and market. The argument of this chapter, like the others here, is that it is wrong to reduce capitalism to competitive markets and private property. Capitalism is also about the state, state control, state direction and state competition in the form of state capitalism. Colin Barker has set out why states and the deployment of their military and economic power, have been integral to the internal development of capitalism over the centuries, but in doing so he only adds a theoretical structure to something that ought to be self-evident from the history of inter-state conflict in the past centuries (Barker 2009). And nowhere has this been so important as in the development of modern Russia. In this chapter I argue that, prior to 1917, Russia had developed as a capitalist

42

michael j. haynes

economy with strong state elements. For a brief period between 1917 and 1928–29, revolutionary Russia was partly detached from global capitalism by a revolution that sought to overthrow it. From 1928, now as the USSR, it continued to develop as the leading example of a state capitalist economy. The collapse of 1991 was then misinterpreted as a total collapse of what now became Russian state capitalism, as the USSR fragmented. But although the collapse did introduce a much greater role for the market, the pursuit of the abstract market model foundered, not only because of its inherent failings, but because a degree of state capitalism continued to exist in all states, including the successor states of the former Soviet Union. Inevitably, the shift to the market in Russia was less complete than its promoters wanted and it soon came to involve a degree of retreat towards a greater degree of state control. Not all of those who see capitalism in terms of both private and state forms do so in the same way (compare Haynes 2002a; 2002b; Resnick and Wolff 2002). Rather than focus on these differences, I propose here to demonstrate the importance of the argument for state capitalism by reviewing the crucial issue of the role of the working class and exploitation in Russia in the past century. The question of whether or not exploitation existed in Russia throughout the last century might seem to be a trivial one. Any society in which the few use their control of the means of production to live off a surplus produced by the many, can be described as exploitative. Since this was self evidently as true of Russia in 1950 as it was in 1900 or 2000, then the question of exploitation is solved. However, this is too simple. Slaves, peasants and workers are all exploited but the form of their exploitation, its determinants, levels and mechanisms, vary enormously. Moreover, these differences go to the heart of what distinguishes a slave mode of production from feudalism, or feudalism from capitalism. To pose the problem of whether there has been a basic continuity in exploitation in Russia throughout the past century similarly raises the question of whether, beneath the changing legal forms of private and state property, there was, as will be argued here, an underlying continuity in the nature of Russian society or whether these juridical changes reflected more substantive changes of shifts in the mode of production and therefore the nature of exploitation. This is exactly the position that most radical accounts, that argue that Russia was non-capitalist, have taken. Commentators could agree

labor, exploitation and capitalism in russia

43

that there were class relations before 1917 and since 1991. In the intervening period, however, there was something else. This something was brutal and oppressive; it was unequal, but it was not based on systematic class exploitation driven by the logic of competitive accumulation. It was not molded by capitalist class relationships and it did not reproduce these class relationships. The Soviet system was wholly or partially detached from global capitalism and so operated with a dynamic of its own. Trotsky, for example, insisted that the system in the USSR was highly degenerate but had nevertheless in its underlying property relations transcended capitalism (Bellis 1979). Control, therefore, did not lie in the hands of a ruling class that used its control of production to exploit workers and peasants but rather Russia’s rulers took a surplus from their control of distribution. When there are enough goods in a store, the purchasers can come when they want to. When there are few goods, the purchasers are compelled to stand in line. When the lines are very long, it is necessary to appoint a policeman to keep order. Such is the starting point for the Soviet bureaucracy. It ‘knows’ who is to get something and who has to wait. (Trotsky 1972:112)

For a long period such arguments dominated the critical analysis of the USSR from the left. Today, however, a different approach is more popular. This approach rejects the idea that the USSR was any form of socialism, degenerate or otherwise. But it also rejects the idea that it was any form of capitalism. But if the latter, is true then it also follows that the central concepts of capitalism also have no real place in the analysis of the USSR as a sui generis system. Indeed, for some more fastidious commentators in this tradition. even the status of the concept of class is inappropriate since the fundamental mechanism creating it was missing (Filtzer 1986). Russia therefore had workers, but no working class. Clarke has argued that Russia had rulers but no ruling class (Clarke et al. 1993). Others declared Russia, before 1991, to be ‘classless’ because they argued that the working class was the dominant class even as they recognized that the mass of the population had no meaningful role in determining their own fate. Somehow the state both stood over the workers but also represented them (Lane 1978). In these accounts, normalcy, in terms of global development, was restored in 1991. But this class restoration then becomes problematic itself for where do the new classes come from, especially the new ruling class? We suggest here, by contrast, that both the past history of Russia and

44

michael j. haynes

its present condition have to be seen as products, except in the years 1917–28, of a series of attempts to maintain continued exploitation of the mass of society, a pattern which at key points has involved some reordering of the system but which throughout needs to be understood in terms of the idea of state capitalism.

State and Capital The restrictive vision of capitalism as a system based on private property and markets creates a serious problem for the analysis of capitalism in general. Firstly, it reduces the analysis of an economic system to its legal relations, what is sometimes called a juridical illusion. Ownership and control are analyzed in terms of a crude association with shareholding, inheritance and the like. This not only implies that the state cannot be ‘owned’ but it also creates a problem for what appears as ‘private’ capital, reflected in the ongoing debate on the socalled separation of ‘ownership’ and ‘control.’ Secondly, it creates a fundamental confusion over the role of the state. Most accounts accept that, to exist, capitalism needs ‘support’ structures that can only be provided by ‘states’ – legal systems, currencies, armies etc. Poulantzas and others went further and tried to develop a more systematic understanding of how the state is also central to class through the development of ideological state apparatuses (Clarke 1991). But such approaches remain insufficient because in all of them the state supports and stands alongside the productive structures of capitalism. What these discussions do not confront is the direct role of the state as a producer, as state capital, and how this has changed over time. This is all the more puzzling since state competition has been present in capitalism since its birth and it can be argued that the state has always been the single biggest ‘productive’ capital in most, if not all national economies. When, however, we view the process of capitalist development historically, we can see that, although capitalism grew out of the development of commodity production, markets and private property, it contained within it the seeds for a far more central role for the state. Drawing a formal line between private capital and the state is, to some extent, arbitrary (Lienert 2009). From the early activities of the British and Dutch state-sanctioned trading companies of the seventeenth century, to the bailed out banks of the early twenty-first century, states have merged with capital directly and indirectly in a variety of ways.

labor, exploitation and capitalism in russia

45

Capitalism develops through competitive expansion and it is and always has been a globalizing force. But capitalism’s development is also uneven. It developed first in Western Europe as both a market and [nation] state-based system, gradually drawing in the rest of the world. With industrialization and the take-off of the leading capitalist states like Britain, France and Germany, development came to be molded by major power differentials. The development of this advanced core was market-based but even here the state was important not simply in creating the structures of market development but also through interventions that stretched from subsidy and protection to examples of ownership and control. By the late 19th century, however, the role of the state would become even more apparent in the follower countries. The countries that were left behind as economic development took off tended to be vulnerable to external pressure or conquest as they fell behind relatively in economic and military terms. The development of the advanced core therefore not only provided a positive demonstration effect of the benefits of development, it also created pressures to respond to avoid loss of power and possibly independence. To maintain a degree of independence, it was necessary to push development along. Population size, the ability to put men into uniform, would no longer guarantee self-determination as it had done when Russia had fought Napoleon. And when, at the start of the 20th century, the world had become divided, inter-state political and military competition then became a more central force in global relations. “What a country calls its vital economic interests are not the things which enable its citizens to live, but the things which enable it to make war,” Simone Weil would later write (in Oldfield 1989:77). From this most cursory of sketches several things follow that are not properly treated in most accounts. The first is that the state and state competition is not a secondary or detached part of capitalism – it is a normal feature of its development. The second is that military competition is not a secondary or detached feature of capitalism either – it too is part of its normal functioning. The third is then that the state as a centralized, organizing force in capitalism has also to be taken seriously. If it makes no sense to ignore the state then it equally makes no sense, to dissolve it into separate elements. The organization of any state might be tighter or looser but it remains a force which depends upon a degree of unity and direction and this is why the idea of state capitalism makes sense. The importance of the analysis of state capitalism in Russia flows directly from these considerations.

46

michael j. haynes The Russian Working Class and the Beginnings of State Capitalism

At the start of the 20th century Russia was the world’s largest state with 15 percent of the world’s land surface, some 8.7 percent of the world’s population, 7.6 percent of its industrial output and 7.4 percent of world income (Gregory 2003). Russia’s rulers presided over a great power, potentially perhaps even the world’s greatest power. “Oh Lord, you’ve given us huge forests, infinite fields, and endless horizons, and we, living here, ought really to be giants,” says a character in Chekhov’s 1904, The Cherry Orchard (Chekhov 1916). But they were not. The international weakness of the Russian state had been brought home to its leaders in the Crimean War; the lesson had been learned again when gains in the Balkans in the 1870s had been taken away under the pressure of the other Great Powers in 1878 and they had had to be learned yet again in 1904–1905 when Japan inflicted a humiliating defeat on Tsarism. On the eve of 1914, Peter Struve, once a Marxist, now a national liberal, argues that, “the higher the economic development of a country, the higher – other things being equal – its military preparedness; and the greater the force which it is able to put forward in a military conflict … no idea is more perverse, and practically more dangerous, than the one which holds that Russia’s economic backwardness can yield some sort of military advantage” (in Pipes 1980:185–6). As the late 19th century progressed, a faction of Russia’s leaders, led most notably by the Finance Minister of the 1890s, Sergei Von Witte, took the view that Russia could no longer wait for capitalism to ‘organically’ develop Russia. The market and Russian business was developing. Joint stock capital rose from 42 million rubles in 1860 to 3,426 million by 1914 with perhaps 38 percent foreign owned (Gregory 2003). Russia was beginning to be integrated into the global economy (as, for example, an agricultural producer). But neither the pace nor direction of development was sufficient to maintain Russia’s great power status. Russia was not alone in this but in European terms it experienced the problem in its sharpest form (Gerschenkron 1962). Successful state directed development could, however, be as difficult to achieve as successful market development (Haynes and Husan 1998). Those whose power depended on the old order, opposed state action; state action was not always coherent and it was not always effective. But none of this stopped the attempt at state directed development being made. In Russia, before 1914, we find, therefore, that the development of capitalism is a product both of market and state forces.

labor, exploitation and capitalism in russia

47

Most crucially, the state tried to manage the integration of the Russian economy into the global economy through the adoption of the Gold Standard in 1897 and the encouragement of foreign investment but also through high levels of tariff protection. Within Russia, state support for industry came through defense orders and, especially in the 1890s, massive support of railway development. By the end of the 1890s some 60 percent of iron and steel output was going into railway development much of which directly depended on the state. By 1914, Russia had the second longest rail system in the world with 70,000 km of rails, three quarters state owned (Davies 1998:8). Contemporaries were well aware, even if they did not theorize it, of the way that the state played an indirect role in encouraging capitalism and a direct role in economic activity as state capital. The Russian state, according to Trotsky in his account of the 1905 revolution, was “the largest entrepreneur, the largest banker, the monopoly owner of the railways and of liquor shops” (Lockwood 2009:33). An American commercial attaché went further in 1904, and said that, “the Russian state is itself the biggest landowner, capitalist and entrepreneur in the world” (Lockwood 2000:203). The development of the working class in Russia was a product of these different forces and their interaction – the protracted development of craft industry feeding predominantly on local markets, the rise of an industry like cotton textiles – reflecting development along the lines of global comparative advantage (using cheap labor, and materials imported from outside or Central Asia) and the more forced development of heavy industry and engineering. By 1914 there were some 17 million or so wage workers in Russia of whom about 2 million worked in the factories, many of them in large units (Haynes 2002a:22). Writing of the British industrial revolution, the historian Sidney Pollard summarized the experiences of workers in a way which seems to apply directly to Russian workers before 1917 with the substitution of the word Russia for England. These he said, were: people like ourselves, subjected to the most momentous transformation of their work environment, from domestic or agrarian, family based labor, to large factory, shipyard or mine. Their well-known landmarks are being swept away, their skills decried, their rhythms of work altered, their social position lowered as the new wealth begins to benefit all the classes except their own. This takes place as one by one their traditional defenses are broken or outlawed, a political corruption becomes more

48

michael j. haynes glaring than ever, as wars and crises remove what stability was left of the laws of ‘old England’. (Renton 2004:118)

These elements combined in Russia to help form what became the most militant working class in the world between 1900 and 1917. In 1900 many workers still had illusions about the autocracy but conflicts within the workplace over wages, hours, conditions and even control, as well as wider political struggles, produced surges of radicalism whose scale and intensity outdid those evident elsewhere (Haynes 2005). Amongst factory workers, their concentration in large plants in St. Petersburg and Moscow helped both to encourage consciousness within and to facilitate their having a wider political impact on society. The 1905 revolution was an extraordinary high point followed by sharp decline and repression only for the movement to rise again after workers in the Lena Goldfields were massacred in 1912. The early period of the First World War saw another sharp decline followed by a further rise, which culminated first in revolution in February 1917 and then in a second revolution in October 1917 (Murphy 2005). An Alternative to Capitalism? The revolution in October 1917 was intended to be not just a political act in Russia but the prelude to a wider revolution as Lenin continually insisted. If capitalism is an international system then a ‘revolution’ restricted to one country makes no sense at all. An economically backward country in particular was hardly the basis for creating a new world. Internationalism was therefore central to the ideas of 1917 and this is why, in the 1920s, the different ideas of ‘socialism in one country’ proved so controversial. Far from being a coup, the seizure of political power represented the results of a mass swing to the left that filled the ranks of both the Bolsheviks and the Left Socialist Revolutionary Party (Rabinowitch 1976; Smith 2002; Wade 2004). But in itself, a political act did not immediately bring about a socio-economic transformation. This was expected to be the future outcome as the revolution deepened internally and spread externally. Unfortunately, within months, the revolution became swept up in brutal civil war as Western support gave counter-revolution both hope and resources. By 1921 this civil war was effectively won (though Vladivostok was not retaken until late 1922) but the result was quite paradoxical. Externally, the revolution

labor, exploitation and capitalism in russia

49

remained isolated as the revolutionary wave in the west now declined. Internally, the revolutionary state had been forced to centralize power as society collapsed. The structures and social forces, and not least the working class, which had created and led the revolution in 1917, had by now disintegrated. What then was the nature of this new ‘system’? I would suggest that the best description of Russia in the 1920s is that it was “a degenerate worker’s state” or, as Lenin put it, a workers’ state subject to two peculiarities: that it was struggling to survive in a largely peasant country and against the pressure of bureaucratic degeneration (Haynes 1985). Russia was no longer simply a part of global capitalism as it had been in 1917 but was now partially detached from it while at the same time subject to internal and external pressures pulling it in different directions. Until the end of the 1920s when this shift was finally consolidated, the regime reflected the attempt to balance the interests of the different groups it drew on, including, crucially, the working class. Initially, economic growth was largely driven by the internal recovery process and a sense that this should not be allowed to reproduce the type of exploitation apparent under Tsarism. During the 1920s, the direct tie to the global economy remained less strong than before 1914. Nor did the regime respond to great power competition in the same way that the Tsarist regime had done. The legacy of the Civil War and the continuing saber rattling from the west about the possibility of military intervention meant that defense could not be abandoned, though there was a genuine attempt at demilitarization. For all its problems the Russia of New Economic Policy of the 1920s remained significantly different both from Tsarist Russia and from Stalin’s later regime and those that followed his. This difference can be measured both in the situation of the peasants and, in terms of my main argument, the situation of the workers. The essential point, as Kevin Murphy has argued, was that in the early 1920s there was some rebuilding of links with the working class as this class itself began to be reformed socially by the process of recovery (Murphy 2005). The regime did not, as was later to be the case, simply evoke the working class as a rhetorical object – it accommodated workers interests and to a degree institutionalized them through trade unions and their role in the factories and the state. Worker interests also found some expression through the party to the extent that it too remained a political force. Problems and tensions were real but both Western and now Russian accounts that focus on an inevitable

50

michael j. haynes

decline to dictatorship, minimize the significance of the break that was to come in 1928–1929. They depend, Murphy argues, on inflated estimates of early state repression, prison camps and violence that cannot be sustained either by the quantitative or the archival data. The material situation of workers in a country recovering from such a devastating civil war was not enviable. However, in comparative terms, the economic situation of workers did improve. According to Murphy, “the early Soviet participatory institutions differed markedly from those of both the Tsarist and Stalinist eras. It was workers’ trust and involvement in workplace institutions that gave the factory regime an essential degree of legitimacy” (2005:4, 226). But this situation could not last indefinitely. By 1927–1928 agricultural and industrial production were beginning to exceed 1913 levels, though on a per capita basis they were still slightly below them. Investment in the economy as a whole was now around 90 percent of its 1913 level. This helped to pose the question of how the Soviet system could develop in the longer run. Two positions emerged. One, associated with Trotsky and the left, argued for as much to be done as possible to speed up the process of growth internally while focusing primarily on spreading the revolution internationally. The revolution could still break out of its isolation and draw on the advanced west to assist in development to minimize the internal strains. But in the mid 1920s Bukharin and Stalin began to develop a different doctrine – that of ‘socialism in one country.’ International revolution would be welcome but the regime could still develop itself – it did not have to wait. This development too would be limited by the need not to break ‘the worker-peasant alliance’ but it was possible to think in more national terms. These ideas appealed to many in the party and state bureaucracy looking to secure their positions. The arguments of the left – essentially the politics that had made the revolution in 1917, the civil war and early years of the NEP now began to be portrayed as romantic aberrations and an attempt was made to restructure politics within more of a national framework. But the Bukharin-Stalin position, with its focus on slower growth in one country, posed serious risks. These became apparent in 1927–28. There was the underlying dissatisfaction with the continuing problems and uncertainties of the NEP itself, the concessions to the market, unemployment and so on. The regime continued to be dangerously dependent on the peasantry and this was brought home when a grain crisis seemed to emerge (its true scale and character is disputed) in

labor, exploitation and capitalism in russia

51

1927–1928. It also appeared weak internationally and this too was brought home on 1927 when a war scare (manipulated to an extent but based upon real problems) developed (Haynes 1985). The result was that Stalin began to marshal his supporters for a dash for rapid growth and industrialization ‘in one country.’ But the final remnants of what was left of the revolution had to be stripped away. Stalin’s supporters here came largely from social layers pulled into the party during the 1920s. Whereas the Civil War had led to the weakening of the Bolshevik tradition through the death of the people who embodied it, the era of the New Economic Policy led to the swamping of those who survived by waves of new recruits, many of whose aspirations were formed by becoming part of a party of power. Soviet state capitalism was born of this ‘revolution from above’ from 1928 onwards. In normal circumstances the tendency of any state to substitute for private capital within its boundaries is constrained by the role of private capitalists’ interests. The peculiarity of Russia at this time was that these interests and constraints had been destroyed by the revolution and civil war. Now the bureaucracy, hitherto a layer, became a class as it rose above society to remold it in its interests. Overcoming the existing internal opposition within the party and from workers, it now had the potential to develop the type of structured state control hitherto seen only temporarily in the First World War. Driven by both economic and military competition, the leaders of the Soviet state would now attempt to direct resources centrally (planning as such was an illusion) to challenge and overcome their adversaries in the world at large by catching up and overtaking them, seeking to outdo global capitalism at its own game. This would lead to a degree of isolation from the global division of labor in order to better build up a core military-industrial base but this was a logic that remained no less a part of global economic-military competition within the modern world economy. “We are 50–100 years behind the advanced countries. We must close this gap in ten years. Either we achieve this, or they will do us in,” said Stalin in February, 1931 (in Davies 1998:58).

Stalinism as State Capitalism Between 1929 and 1991 the Soviet regime claimed both continuity with 1917 and that the USSR existed as a socialist state. The 1936 Constitution said that the USSR was “a Socialist state of the workers

52

michael j. haynes

and peasants,” and the 1977 Constitution said that it was “a Socialist state of the whole people.” This was an imaginary evocation of workers’ power made in the name of no less imaginary workers. Take, for example, this lyrical picture, ostensibly the words of Leonid Brezhnev. The Soviet worker: is a great toiler, has inexhaustible patience, knows his business and is used to doing it well. Even under Tsarism, in conditions of exploitation, bad work was anathema to him, for he always valued craftsmanship and esteemed his work. Almost all the riches accumulated by mankind were created by his muscular hands, but he himself was never attached to possessions, his soul was not destroyed by mercenary considerations, but there lives in him a breadth, a boldness and a constant craving for justice. He is resourceful, keen-witted and endowed with a lively mind and humor. He is decisive, daring, true in friendship and ready, at any moment, to come to the aid of another. The factory hooter called everyone to work together, he joined the other workers and from this there arose a strong feeling of unity, of community of interests, of the sort of proletarian solidarity which millions of people, of varying ages, experience, customs and nationality, made into a powerful, monolithic and truly revolutionary class. (Brezhnev 1982:10)

So far from reality were such pictures that under Stalin there was a more or less complete suppression of information about the real condition of workers. After 1953, information became more widely available but discussion was still obscured by official myth. Outsiders could see more clearly but they too remained confused by the apparent contradictions of the USSR. “The major structural class features of capitalist societies have been abolished but …the … government and social relations anticipated by Marx and Lenin in a socialist society have not been achieved,” said one. In this seeming limbo land, “Soviet society is not characterized by class conflict relations, as understood in traditional Marxist analysis” (Lane 1978:179, 182). The apparent paradox of Stalinism was that it extended state property and emasculated the working class at the same time. But this paradox disappears if we recognize that state control and state property can be just as much infused by the dynamic of capitalism as private property and the market. What might then distinguish the USSR is less a difference of kind, after 1928, than a difference of degree. From the 1930s through to the 1960s the growth of the USSR, especially allowing for the destruction of World War II, was then historically unprecedented. Only Japan had a comparable success. Elsewhere, development blockages seemed to dominate the experiences of follower countries trying to industrialize (Allen 2003). Conventional

labor, exploitation and capitalism in russia

53

measures of this have been challenged but not overturned. In the 1930s (all figures in the next paragraphs are measured in 1937 prices), output grew at some 5–6 per cent per annum and in the 1950s at some 5–7.5 percent. This was Soviet state capitalism at its peak. This growth was only possible because of a huge ratcheting up in the rate of accumulation in the early 1930s. Gross investment rose from 12.5 percent of GNP in 1928 to 25.9 percent in 1937. Part of this was poured directly into defense industries, which acted as a Rostovian leading sector in the Soviet take-off. Between 1930 and 1940 there was a 28-fold increase in production in the defense sector. The share of defense in output rose from 1.3 percent in 1928 to 7.9 percent in 1937 and then increased again as war came closer in the years 1937–1931. But to support the defense sector, the heavy industrial base had also to be built, creating a military industrial complex at the heart of the Soviet economy. At the high point of the regime, Alexander Gerschenkron wrote: ‘Accumulate, accumulate! This is the Moses and the Prophets!’ Those are the words in which Karl Marx tried to describe the quintessence of capitalism. There is every reason to doubt that there has been any economy on modern historical record to which these words would apply with greater justification than to the economy of the Union of the so-called Socialist Soviet Republics.’ (Gerschenkron 1962:278–9)

Industrial growth rates, and heavy industrial growth rates in particular, were even more impressive than the growth for the economy as a whole because these were held down by the catastrophic situation of the large agricultural sector at whose expense much of the growth was taking place. Agricultural production increased by less than 10 percent between 1928 and 1937 and fell on a per capita basis while industrial production nearly tripled (Davies 1998:43–57). The result of these changes was that workers in the USSR now found themselves in a new position. The Soviet industrial revolution produced a large working urban class in a previously peasant society. In 1926, 16 percent of the population was urban. By 1939, the figure was 33 percent, an increase from 26 to 56 million. By 1959, it was 48 percent and the USSR became 50 percent urban in 1961. The numbers employed in industry, construction, transport and the like also grew quickly. The speed of this advance meant that, until quite late on, migration played a key role in the growth of the working class. This allowed the expansion of old industrial areas but also the development of new ones including the symbolic new sites of the Dneiper Dam, the Urals-Kuznetsk Combine and Magnitogorsk. New peasants were both pulled into the towns and pushed there by the impact of

54

michael j. haynes

rural collectivization. The rural repression and poverty associated with the creation of 250,000 collective farms from the 25 million peasant households remained an inducement to seek a degree of salvation in the towns and factories because conditions, however bad they were, were nevertheless better than conditions on the farm (Haynes 2002a). These Soviet workers now experienced a basic alienation from the system that was no less intense than what workers experienced elsewhere in the world. The capital accumulated in their name, by the state, now confronted them as an alien force whose direct control was embodied in a rebuilt class hierarchy. “The foreman is the authoritative leader of the shop, the factory director is the authoritative leader of the factory, and each has all the rights, duties and responsibilities that accompany these positions,” said L. M. Kaganovich (in Cliff 1974:13). At best, workers had the negative sanction, as workers the world over have, of working less than enthusiastically; ‘they pretend to pay us and we pretend to work’ was a favorite saying. In his Labor and Monopoly Capital, Harry Braverman observed that, “Soviet industrialization imitated the capitalist model; and as industrialization advanced the structure lost its provisional character and the Soviet Union settled down to an organization of labor differing only in details from that of the capitalist countries, so that the Soviet working population bears all the stigmata of the Western working classes” (Braverman 1974:12). At one level, this seems obvious, but Braverman, in the plaudits that greeted his work, got few thanks for this particular observation even from radical critics of the USSR. By suggesting an essential similarity in the labor process, the comment threatened to undermine a simple dichotomy built around state-private, centralized control-market distinctions. Alienation and exploitation went hand in hand. Soviet workers were now subject to systematic exploitation driven by the competitive accumulation drive. Even a brief survey of the situation in the 1930s shows the extent to which workers were not simply oppressed but subject to systematic exploitation. As accumulation and defense expenditure rose, household consumption fell from 79.5 percent to 52.5 percent of output. This fall was partly mitigated by an increase in the collective consumption share from 4.6 to 10.5 percent but consumption overall still fell from 84.1 percent to 63.0 percent, a decline perhaps without precedent in a peacetime situation. Real wages collapsed, especially in the face of inflation. According to Davies, “the real income of wage earners outside agriculture may have fallen by nearly 50 per cent

labor, exploitation and capitalism in russia

55

between 1928 and 1940” (1998:46). The decline in wages was sharpest between 1929 and 1933 and shortages of basic foods meant rationing from 1929 to 1935. Over the long run, as the Soviet economy grew, resources would be produced to allow an increase in the standard of living of the mass of the population but in the short-to-medium run, growth depended on an attack on it and even when the standard of living did begin to rise it remained continually restricted by the way that the pressure of competition forced resources into defense, the military industrial complex and accumulation (Haynes and Husan 2003). Class is a two-sided process. The same logic that refuses to recognize an alienated and exploited working class also often refuses to recognize that the USSR had an exploiting ruling class. This is somewhat ironic as it is a commonplace of Marxism that the state is both an instrument of class rule and an expression of a basic class contradiction. Since the workers could not control the state or articulate their interests through it, who then did it represent? To answer this we have to directly map the contours of the effective disposition of the means of production. Much has continually been made of the fact that state ownership precluded the direct inheritance of position. But this was little different from managerial control of state enterprises in the West or from what happens with the management of much ‘private’ industry. Here, as in the USSR, the inheritance issue is a diversion – it is the control over machines and men, the means of production and the direct producers that should be the key, though we should note that in the USSR, as in the West, the wealth, power and privilege that goes with managerial control did create widespread opportunities to generate mechanisms for the secondary and more indirect transfer of position (Haynes 2002a; Joo 2005). This class mechanism of control of the means of production was articulated in the USSR through the political system, which gave a central role not simply to the direct control of (state) capital and the usual apparatuses of class rule, but also to the partysecret police nexus. For a long period, individual roles were also articulated through the so-called nomenklatura listings of appropriate candidates for appropriate jobs. But it is important not to mistake these elements for the phenomenon of class itself. These were parts of the mechanisms of political rule, built upon a more basic control of the economic processes and the state. It was this that would allow a fundamental continuity in the social composition of the ruling class after 1991, even as the formal party-secret police-nomenklatura system withered.

56

michael j. haynes

Finally, I must note that, during the whole period, workers in the USSR were subject to systematic repression. Those accounts that stress the integration of the working class and its identification with the regime, fail to address the continuing way in which repression produced political atomization. The role of the Gulag is now well known and its scale mapped out in the statistics from the archives (Haynes and Husan 2003). But the debate on numbers has served to distract attention from the way in which repression was used not simply to suppress opposition, but to mold the labor process to meet the objectives of rapid accumulation. No less than elsewhere, Soviet workers lived personal lives that combined hope and despair, satisfaction and discontent. This is how most humans survive even in the worst of circumstances. We work, socialize, drink, laugh, joke, have sex, build families. And deprived of other choices we make pragmatic accommodations with the systems in which we live. But the constraints that mold these are real enough even in a democratic capitalist society. In a dictatorial society like the USSR, with a history of state terror, the constraints are worse because the terror (or its memory) remains ever present – even as the power of the state is used to suppress any discussion of repression in favor of a more lyrical view of daily life. When the use of overt repression declined after 1953, workers in the USSR continued to lack the most basic rights. Their real lives therefore told a very different story from the images of workers as poster heroes. When Soviet miners went on strike in 1989, they protested not simply the low pay but a system that, for all its rhetoric, had maintained harsh working conditions not seen in the advanced west for decades (Friedgut and Siegelbaum 1990).

The Peculiar Problem of Soviet Collapse and Transition For some half a century this system looked to be a threat to the West and, in its own terms, stable. But from 1989–1991 the Soviet system crumbled. The USSR’s rulers lost control of the Soviet bloc and then the USSR itself disintegrated into 15 parts, where the Russian Federation was the largest fragment. “The fall of the Communist empire is an event of the same scale of historical importance as the fall of the Roman empire,” said Vaclav Havel, and this idea of epochal change found wide echoes (in Sakwa 1999:1). Yet this revolution did not seem to fit the normal categories. There was no obvious overturn of the rule of an

labor, exploitation and capitalism in russia

57

existing class prompting a still ongoing discussion as to how the change should be described (Sakwa 1999; Outhwaite and Ray 2005). Not the least reason for this is that the transition, like many transitions from authoritarian capitalist systems since the 1970s, seems to have involved a substantial conversion of power. There was a political change and a re-ordering of elements of the old regime but so far as control of the means of production is concerned, the ‘transition’ bears more resemblance to an insider management buy-out than the usurpation of power by a new and hitherto suppressed group. Moreover, in the short run, the overwhelming impression was one of the privatization of what had hitherto been collective control. The forms that this produced often seemed paradoxical and within a decade attempts were being made to reconstitute some of the collapsed links of the old system. How then did this peculiar transition occur and leave workers in the new Russia (and other successor states) as much at the bottom of the pile as they had been under the old regime? The last decade and a half of the Soviet regime presented something of a paradox. Progress was slowing but there were still real achievements. The USSR appeared now to have a good nuclear capacity, a blue water navy, formidable armed forces and a capacity to send men and women into space but it was still much less developed than the US or Western Europe. Sustaining its military might meant an inability to develop other areas. Whereas the US had a military budget of some 7 percent of output in 1984, in Russia it was at least 15 percent and possibly higher. In 1985, the Soviet consumption share was still only 73.7 percent of output compared to 86.4 percent in the USA; 75.3 percent of industrial output came from Group A industries, largely producer goods, and only 24.7 percent came from Group B – the main (but not exclusive) consumer goods group. Over time, a greater degree of integration with the world market had developed but the USSR could not hold its own. Total hard currency exports in the 1980s, outside the Comecon bloc of its satellites, were less than those of Belgium with 70 percent of export earnings coming from natural resource exports. Nor did this look likely to change unless the system changed. In 1987 the number of telephones per capita in the USSR was still at the 1920 US level. Computerization “can only be described as a tragedy,” wrote one young economist at the time, when the USSR had perhaps 1 percent of the US capacity. Agriculture, too, continued to be a heavy drag on growth (Illarionov 1990:307). Perestroika was an attempt to deal with this and avoid what Illarionov called “the distinct possibility of [the USSR] finding itself on quite a

58

michael j. haynes

different plane of social progress from the developed countries” (Illarionov 1990). The reforming group, led by Mikhail Gorbachev, tried to circumvent resistance to reform at the top by loosening political controls and generating controlled support from below. This trick had been attempted before by reform-minded sections of the local ruling classes of Soviet satellites like Hungary and Czechoslovakia. But genies had been unleashed and control had threatened to slip from the hands of those who wanted reform from above. Then the Red Army had been deployed to halt the process. Now the same thing happened in the Soviet Union itself under the flag of glasnost. It was given a huge push in 1989 when hundreds of thousands of miners went on strike, threatening the re-emergence of an independent labor movement and a serious challenge from below. Yet the challenge was successfully negotiated by a major section of the old ruling class. After 1985, two different types of movements were spreading. One was at the top. Its principal political aspect was a more or less radical debate over reform and the balance of state and market, its principal social aspect was a more or less sharp jockeying for position to take advantage of any shift in the way the system was organized. The second movement came from below, with the partial awakening not only of a wider civil society but also, within it, the Soviet working class. Here the emerging demand was for democratization and social justice and an attack on the gross inequalities of Soviet life. These movements were potentially contradictory and, at the top, the more insightful reformers saw this. Gavril Popov acquired some notoriety in the perestroika and early transition years for saying openly what others thought: “now we must create a society with a variety of forms of ownership, including private property, and this will be a society of economic inequality … The masses long for fairness and economic equality. And the further the process of transformation goes the more acute and the more glaring will be the gap between these aspirations and economic realities” (in Lukin 2000:240). These shifts took place amidst a confusion of ideas. Since the regime claimed an inheritance from 1917, most workers were suspicious of ideas of ‘workers’ power’ even as they began to express it in their own actions and strikes. Since the regime claimed to be ‘socialist’ most workers naturally associated ‘socialism’ with the day-to-day exploitation and privations that had marked their lives. Since the regime attacked ‘capitalism’ most workers assumed that this was what they did not have and if they had it their lives would be improved. This confusion played into the hands of those at the top. It enabled them to fight their battles

labor, exploitation and capitalism in russia

59

for position and power within the ruling class and to avoid the risk of this leading to loss of control to the forces below, even when, as in 1991, the turmoil led to one section of the USSR’s political leaders attempting a coup against the other. The political beneficiary of this conflict was Boris Yeltsin who had established himself with radical reform credentials on the basis of his appeals to democratization. But Yeltsin was also clear, as were his influential supporters, that reform, even if it was radical, had to be a top down process – it needed the support of a wider social movement but could not be carried out by that movement. This helps to explain the form of the breakup of the USSR, which led to Russia emerging as its biggest fragment. The components of the old Soviet ruling class effectively agreed to an amicable divorce in order to be better able to defend and re-order their own local positions. In hindsight, this was a startlingly successful move. The modified state structures of the old regime would remain in place and this would help the ruling classes to stay in place too. The shift allowed some space for new entrants to the ruling class but these newcomers usually had some prior position. Overall what is striking is the broad continuity of power at the top producing the high level of social continuity. This was not so much a shift in the mode of production but a reordering within it (Callinicos 1991). We want to insist on the importance of this argument not only because we think that the state capitalist analysis makes better sense in itself but also because it helps us to understand another issue – the role of western influence. A number of critical commentators have explained the transition in terms of Western manipulation of ideas, aid and institutional links. Some even suggest that it was the west that acted as a midwife of a new ruling class whose prior existence in the former USSR they deny (Lane 2005). Western influence was real but it did not act on a docile ruling class or an as yet unborn one. Rather, sections of that ruling class proved adept at using their western connections not only to feather their own nests but also to strengthen their positions and influence. They were not simply pawns but active players, to such an extent that the question of who was using whom becomes an intriguing one. Leading figures in the Russian reform movement in the early 1990s appeared craven before the West but this was perhaps more because it suited them to be so at the time. In any capitalist society there is a potential conflict between the immediate interests of individual capitalists and their collective ‘national’ interest. In Russia, in the early 1990s, the former came to

60

michael j. haynes

predominate over the latter. The reforms introduced more market processes in a totally chaotic way. The collective control mechanisms of the old society collapsed. The result, Glatter has suggested, was rather like an army where the officer corps remains in charge but the command and supply structure disintegrates. Each officer or group of officers therefore sought to use their position and power over others and the immediate resources around them to plunder and pocket as much as they could (Glatter 2003). At first glance this was a disaster. Everywhere it has involved massive output collapses and a diminution of ‘national’ power and status and not least for Russia itself. But seen in class terms, the story becomes more complicated. Even as output collapsed there was a huge swing of both wealth and income towards the top and its de facto and then its de jure privatization. Collective control and appropriation gave way to a more (but not exclusively) individualized form of control and appropriation. This partly involved the takeover of state forms but it also involved using access to resources to develop economic activity in the shadows. According to one estimate, by the mid 1990s some 40 percent of output was being generated in the shadow economy compared to 12 percent in 1989. Table 1 sets out one measure of how the distribution of income changed. As the data for 1991 suggest, the USSR was itself characterized by significant income inequality, comparable to a number of western societies, but in the 1990s there developed an explosion of inequality (Milanovic 2003).

Table 1. Income Distribution in Russia, 1991–1997 Quintile Poorest 20 percent Next 20 percent Next 20 percent Next 20 percent Richest 20 percent Gini Coefficient Decile ratio

1992 1993 1994 6.0

5.8

5.3

11.6 17.6 26.5 38.3

11.1 16.7 24.8 41.6

10.2 15.2 23.0 46.3

1995 1996 1997 1998 1999 2000 5.5

6.2

6.2

6.2

6.2

5.9

10.2 10.7 15.0 15.2 22.4 21.5 49.9 46.7

10.6 15.1 21.4 47.4

10.5 14.9 21.0 47.3

10.6 14.9 21.0 47.3

10.1 14.5 20.9 48.6

0.289 0.398 0.409 0.381 0.375 0.375 0.379 0.394 0.401 8.0 11.2 15.1 13.5 13.0 13.5 13.4 13.9 na

Source: Ovtcharova, Lilia (2001) What Kind of Poverty Alleviation Does Russia Need? Russian-European Centre for Economic Policy Research Paper, May pp. 19, 20

labor, exploitation and capitalism in russia

61

The biggest redistribution was away from the bottom 40 percent. Initially there was some relative gain by the top 40 percent but soon even the 4th quintile struggled to hold its relative share and, within this group, as can be seen from the decile ratio that peaked in 1994, the biggest gain went to the top 10 percent. One way of thinking about this shift is in terms of a movement from a system of ordered exploitation to an intensive period of disordered exploitation. Under Putin and Medvedev an attempt has been made to assert a more collective vision again. The problem is that though the state remains central to life in Russia, state integrity continues to be weak. How weak is obscured to some extent by the good fortune of rising oil revenues at the start of the new century. It is therefore easier for Russia’s rulers to solve problems with words rather than deeds as Putin continues to find. But aspiration is significant. If the day of old style Soviet state capitalism is past, so too is the day of the idea that Russia could achieve some neo-liberal nirvana. The trouble is that an enormous price has been paid for these changes by the mass of Russian workers. A vision of a different future briefly opened up in 1988–1989 only to be lost as the whirlwind of crisis swept across Russia in the 1990s. The economic collapse led to huge privation and crisis. In the first period of the transition, hyper-inflation wiped out the savings of those who could not put their money into dollars or some other western currency. It also slashed the real value of wages. As inter-enterprise relations became more difficult for employers and the state’s tax based weakened, a huge backlog of wage payments developed. By the autumn of 1998, wage areas affected 70 percent of the Russian workforce. Wages were being paid months late at reduced cash levels (because of inflation) or even in kind. Unemployment and disguised unemployment became widespread. The birth rate was pushed sharply below its normal trend line of decline as material need and spiritual despair led people to delay or abandon hopes for children. But even more dramatically, the death rate rose and especially so for adult working class males who were one of the groups hardest hit. Russian men developed the highest death rate for their group in Europe. The suicide rate rose from 14 per 100,000 in 1990, to 40 per 100,000 in 2000, the murder rate more than doubled from 14 to 31 per 100,000 from 1990–1995. No other modern society has ever experienced such a demographic crisis outside of the impact of war, famine or some other catastrophe or disaster (Haynes and Husan 2003). Workers were therefore thrown back on their own resources

62

michael j. haynes

and even enterprises, and the chances of building on an emergent solidarity evident in 1989 were seriously diminished. (On the situation of the miners, see, for example, Ferguson 1998) As Javeline puts it, “the most generous estimates of strikers and protestors in Russia in the 1990s still represented only 1 or 2 per cent of all Russian workers …” (Javeline 2004:2). Against this background it is difficult to be positive and easy to be nostalgic, especially for the more settled situation of the late USSR. But as I have tried to show, it is a myth that Russian workers were in some sense privileged before 1989. And despite their poor situation since 1989, they have made one important gain. In however an attenuated form, the opening up of the political system did create a space for independent activity and organization. This was and is important given the past history of repression. If the turmoil of the transition has prevented workers being able to take advantage of this, the opening still remains. Here, however, too often western radicals compound the confusion by arguing that a society that was never properly socialist has now become one that is still not properly capitalist (Clarke 2006; Siegelbaum 2004). If this is so the lines of a clear class conflict are supposed only to exist in the future. Now only confusion reigns. This might seem an intellectually satisfying position from afar but it is hard to see how it addresses the extent to which Russian workers have been systematically squeezed by successive regimes over the past century and the dynamic that lies behind this. Moreover, as the global crisis began to roll around the world in 2008 and 2009, sucking in Russia, so the idea of a general triumph of the market over the state – the misleading neo-liberal illusion – looked foolish. If neo-liberal ideas continue to dominate much mainstream thinking, despite the crisis, the reality on the ground continues to be one where the state plays, as Bremmer suggests, a crucial role: Governments, not private shareholders, already own the world’s largest oil companies and control three-quarters of the world’s energy reserves. Other companies owned by or aligned with the state enjoy growing market power in major economic sectors in the world’s fastest-growing economies. ‘Sovereign wealth funds,’ a recently coined term for stateowned investment portfolios, account for one-eighth of global investment, and that figure is rising … Not quite 20 years ago, the situation looked a lot different. After the Soviet Union buckled under the weight of its many internal contradictions, the new Kremlin leadership moved quickly to embrace the Western economic model. The young governments of the former Soviet republics and satellites championed the West’s

labor, exploitation and capitalism in russia

63

political values and began joining its alliances. … But the free-market tide has now receded. In its place has come state capitalism, a system in which the state functions as the leading economic actor and uses markets primarily for political gain. This trend has stoked a new global competition, not between rival political ideologies but between competing economic models. And with the injection of politics into economic decision-making, an entirely different set of winners and losers is emerging. (Bremmer 2009)

Capitalism will continue to have both a private and a state form and this needs to be the subject of proper analysis both to understand Russia and the wider world of which it is a part.

References Allen, R. 2003. From Farm to Factory: A Re-interpretation of the Soviet Industrial Revolution. Princeton: Princeton University Press. Barker, C. 2009. Industrialism, capitalism, force and states: some theoretical and historical. issues. International Journal of Management Concepts and Philosophy 3(4): 313–333. Bellis, P. 1979. Marxism and the USSR: The Theory of Proletarian Dictatorship and the Marxist Analysis of Soviet Society. London: Macmillan. Braverman, H. 1974. Labor and Monopoly Capital. New York: Monthly Review Press. Brezhnev, L. 1982. Memoirs. Oxford: Pergamon. Callinicos, A. 1991. The Revenge of History: Marxism and the East European Revolutions. Oxford: Polity. Chekhov. A. 1916. The Cherry Orchard (trans Julius West). http://www.ibiblio.org/ eldritch/ac/coa2.htm. Clarke, S. ed. 1991. The State Debate. London: Macmillan. Clarke, S., P. Fairbrother, M. Burawoy, and P. Krotov. 1993. What about the workers?: Workers and the Transition to Capitalism in Russia. London: Verso. Clarke, S. 2006. The Development of Capitalism in Russia. London: Routledge. Cliff, T. 1974. State Capitalism in Russia. London: Pluto Press. Davies, R. 1998. Soviet Economic Development from Lenin to Khrushchev. Cambridge: Cambridge University Press. Ferguson, R. 1998. “Will democracy strike back? Workers and politics in the Kuzbass.” Europe-Asia Studies 50(3): 445–468. Filtzer, D. 1986. Soviet Workers and Stalinist Industrialization: the Formation of Modern Soviet Production Relations 1928–1941. London: Pluto Press. Friedgut, T. and L. Siegelbaum. 1990. “Perestroika from below: the Soviet miners’ strike and its aftermath.” New Left Review 181: 5–32. Gerschenkron, A. 1962. Economic Backwardness in Historical Perspective. Harvard: Belknap Press. Glatter, P. 2003. “Continuity and Change in the Tyumen’ Regional Elite 1991–2001.” Europe-Asia Studies 55(3): 401–435. Gregory, P. 2003. Ekonomicheskii rost Rossiskoi Imperii (konets XIX – nachalo XXv). Novie podscheti i otsenki. Moskow: ROSSPEN. Haynes, M. 1985. Nikolai Bukharin and the Transition from Capitalism to Socialism. London: Croom Helm. ——. 2002a. Russia. Class and Power in the Twentieth Century. London: Bookmarks.

64

michael j. haynes

——. 2002b. “The political economy of the Russian Question after the fall.” Historical Materialism: Research in Critical Marxist Theory 10(4): 317–362. ——. 2005. “Patterns of conflict in the 1905 Revolution.” Pp. 215–233 in P. Glatter ed., The Russian Revolution of 1905: Change Through Struggle. London: Porcupine Press. Haynes M. and R. Husan. 1998. “State and Market in the Eastern European Transition.” Journal of European Economic History 27(3): 609–644. ——. 2003. A Century of State Murder? Death and Public Policy in Russia. London: Pluto Press. Illarionov, A. 1990. “Where are we?” Communist Economics 1(3): 299–311. Javeline, D. 2004. Political Passivity and Russia’s Health Crisis. Kennan Institute, Occasional Paper, no. 287. Joo, H. 2005. “Narratives of Inequality Under Communism: Voices from Below.” Problems of Post-Communism 52(6): 46–58. Lane, D. 1978. Politics and Society in the USSR. 2nd ed., London: Martin Robertson. ——. 2005. “Revolution, class and globalisation in the transition from state socialism.” European Societies 7(1): 131–155. Lockwood D. 2000. The Destruction of the Soviet Union. A Study in Globalization. London: Macmillan. ——. 2009. Cronies or Capitalists? The Russian Bourgeoisie and the Bourgeois Revolution form 1850 to 1917. Newcastle UK: Cambridge Scholars Publishing. Lukin, A. 2000. Political Culture of the Russian ‘Democrats’. Oxford: Oxford University Press. Milanovic, B. 1998. Income, Inequality and Poverty during the Transition from Planned to Market Economy. Washington DC: World Bank. Murphy, K. 2005. Revolution and Counterrevolution. Class Struggle in a Moscow Metal Factory. Oxford: Berghahn Books. Oldfield S. 1989. Women Against the Iron Fist. Alternatives to Militarism 1900–1989. Oxford: Blackwell. Outhwaite W. and L. Ray. 2005. Social Theory and Postcommunism. Oxford: Blackwell. Ovtcharova, L. 2001. What Kind of Poverty Alleviation Does Russia Need? RussianEuropean Centre for Economic Policy Research Paper, May. Pipes, R. 1980. Struve, Liberal on the Right, 1905–1946. Cambridge Mass.: Harvard University Press. Rabinowitch, A. 1976. The Bolsheviks Come to Power. The Revolution of 1917 in Petrograd. New York: W.W. Norton. Renton, D. 2004. Sidney Pollard. A Life in History. London: Tauris Academic Studies. Resnick. S. and R. Wolff. 2002. Class Theory and History. Capitalism and Communism in the USSR. London: Routledge. Sakwa, R. 1999. Postcommunism. Milton Keynes: Open University Press. Siegelbaum. L. 2004. “The condition of labor in post Soviet Russia. A ten-year retrospective.” Social Science History 28(4): 637–665. Smith, S. 2002. The Russian Revolution: a Very Short Introduction. Oxford: Oxford University Press. Trotsky, L. 1972. The Revolution Betrayed. New York: Pathfinder. Wade, R. 1992. “East Asia’s economic success.” World Politics 44(1): 270–320. Wade, R. ed. 2004. Revolutionary Russia. New Approaches. London: Routledge.

CHAPTER FOUR

THE ‘RUSSIAN QUESTION’ AND THE U.S. LEFT Martin Oppenheimer It is impossible to understand the history of the twentieth century without first thinking clearly about the nature of Soviet-style, statist societies. Yet conventional social science, at least until the late 1940s, contributed virtually nothing of value to the development of that clarity. Until the Cold War, social theory on Soviet society was the exclusive property of radical sects in the USA, and of left movements in other countries. An exception was a 1944 special issue of The American Sociological Review on Russia. The pieces in this volume, on the whole, dealt almost entirely with legal forms and made no attempt to examine either the reality of stated conditions or their implications for social theory.1 As the ‘Iron Curtain’ expanded westward with the Czechoslovak coup of 1948, it became increasingly clear to the intelligence community that there was a dearth of serious information about Soviet society. A collaboration between the State Department, the newly-formed C.I.A. and Harvard University, with funding from the Carnegie Corporation, resulted in the creation of the Harvard Russian Research Center (HRRC), directed by anthropologist Clyde Kluckhohn, and including on its Executive Committee the sociologist Talcott Parsons. The Center’s Refugee Interview Project, using Soviet émigrés living in West Germany as sources, and funded by the Air Force, produced an extensive literature much of which was made available to the public (Bauer, Inkeles and Kluckhohn 1956; for a critical history of this project see Oppenheimer 1997). Although much of this was interesting, its orientation towards analyses of Soviet morale, or examination of its elites—sophisticated Kremlinology as we used to say—was strictly in

1

A much older body of theory on the nature of organizations, that of the ‘iron law of oligarchy’ school (Pareto, Mosca, Michels, and Weber for example), will not be discussed in this chapter even though some did write about early developments in the USSR.

66

martin oppenheimer

the service of the intelligence community. A series of studies sponsored by the Hoover Institute at Stanford University, one of which dealt with the Politburo, also focused on elites rather than social structure (Schueller 1951). Aside from the work of the HRRC, there was very little of substance from the academy until the appearance of Hannah Arendt’s The Origins of Totalitarianism (1958). The gist of her argument is twofold: first, that totalitarian systems such as Nazism and Communism are, in their essence, more similar than different since they operate with the same strategy of appealing to isolated, atomized individuals, and use the same method, that of terror, in controlling populations; and second, that they are indeed total, overwhelming in their control of society and its masses so that their domination is virtually unshakable. It is true that, after the Hungarian Revolution of 1956, Arendt said that this domination contains the seeds of its own destruction, and that “every end in history necessarily contains a new beginning,” (478) but this rhetoric is not otherwise supported in her work. She fails to examine the qualitatively different economic dynamics underlying different ‘totalitarian’ states (Germany’s economy under Hitler remained capitalist, though severely regulated in the service of imperialist war making, while capitalism had been destroyed in the Soviet Union); therefore, she cannot explain how changes in class structure over time might lead to conflict and the collapse of Stalin’s ‘totalitarian’ state apparatus. For alternatives to generally sterile ‘bourgeois’ social science approaches to Soviet society, one had to turn to the left. Those familiar with the socialist movement in the U.S. will be aware that, for better or worse, the ‘Russian Question’ was arguably the most important single issue defining left parties and organizations. This is not to say there were no other issues that divided the left. The issue of democratic versus centrist organization, the ‘Negro Question,’ the role of the trade union movement, the New Deal, the approaching war, even the definition of ‘left’ (was the Communist Party really left?), to mention the more important, all played their parts in dividing the left. The Russian Question was an issue with both political and personal consequences. The answer to where one stood on the Soviet Union was based, necessarily for anyone who claimed to be a Marxist, on one’s analysis of the class structure of the USSR. Parties were organized, split, re-split, families divided, people attacked in street meetings (and in some countries assassinated, imprisoned, executed) according to where one stood on this issue. If one wishes to see theory about Soviet

the ‘russian question’ and the u.s. left

67

Russia, what it was, what social classes existed there, if any, and how whatever was there came to be, one must turn to the writings of these groups. Indeed, the thinking of several figures who would become leading American sociologists later on was formed in the cauldron of this dispute (Oppenheimer and Stark 1998:783). Left views of Soviet-style societies have traditionally fallen into three broad categories, with numerous variations. One of these has been demonstrably bankrupt for many decades but deserves attention because of the damage it has done and continues to do to the general public’s understanding of what socialism is. The other two, with their variations, continue to be debated. The old Communist Parties and their peripheries consider the former Soviet Union and other countries of the bloc (plus China, Vietnam and Cuba) to have been, or to be, ‘socialist countries.’ Capitalist ideologues eagerly assent to this identification of socialism with these dictatorships. Current mainstream media boasts that the collapse of ‘Communism’ demonstrates the bankruptcy of the socialist ideal is only the latest version of more than three-quarters of a century of using every failing within the Soviet bloc (or Cuba, etc.) as a cudgel to discredit all socialist ideas. These efforts have, on balance, been fairly successful. Equating socialism with top-down dictatorial rule (and material poverty) today carries over to equating socialism with topdown nationalization. The nationalization of various capitalist institutions by European social democratic governments, benign as some of these might be, is nevertheless a corruption of the meaning of socialism, even as many capitalists favor it in their present moment of crisis. The point is: neither total nationalization by a Soviet-style bureaucracy, nor partial nationalization by a social democratic government under capitalism, constitutes socialism in any way. If socialism is understood as inherently linked to democracy from the ground up, what the New Left called participatory democracy, one can only wonder at the lack of historical education in the general population when so many people assume that President Obama’s minimalist health insurance plan or his minor tinkering with financial regulation constitutes socialism. We of the anti-Stalinist left did not need to read Khrushchev’s Special Report to the 20th Congress of the Communist Party of the Soviet Union (1956) to know that the Soviet regime did not represent the working class, that it was a brutal and repressive regime, and that it was opposed by many sectors of the ‘popular masses.’ Such illusions had been rejected by virtually all left organizations outside the

68

martin oppenheimer

U.S. Communist Party’s orbit long ago, in some cases as long ago as the 1920’s, certainly by the time of the great purge trials of the 1930s. Nor can any serious Marxist accept the notion, promoted by many Communists besides Krushchev, that the only problem was ‘mistakes,’ perhaps even ‘crimes’ committed by a handful of people including Stalin, and that it was merely distortions due to a ‘cult of personality,’ or that economic failings were attributable to an overly rigid refusal to allow mass participation. A centralized command economy, in this view necessary for swift development in a backward country surrounded by enemies (a debatable point), necessarily breeds corruption and stagnation, so the argument goes. But Stalinism, according to that perspective, is vindicated because the Stalin regime also led to Gorbachev, who by his very existence and initial success demonstrated the system’s capacity for self-reform. Unfortunately, Gorbachev failed and the system self-destructed altogether. This approach begs the question of how this command economy evolved over and against the organs of workers’ democracy in the early years of the revolution. What were the historical circumstances that led to the rise to power of a paranoid Stalin, and to the development of such a corrupt and criminal regime? These are the questions that the anti-Stalinist left has been grappling with for a long time. Whatever the answers, the idea that the Soviet Union was a socialist society, a workers’ state, and that societies modeled on the Soviet Union were or are in any way ‘socialist countries’ is not tenable. An early warning about dictatorial tendencies within Lenin’s young Soviet Republic came from Rosa Luxemburg in her pamphlet The Russian Revolution, written from a German prison cell in 1918, shortly before her murder. Her prophetic words are worth repeating (1940: 47–48): Public control is indispensably necessary… But with the repression of political life in the land as a whole, life in the soviets must also become more and more crippled. Without general elections, without a free struggle of opinion, life dies out in every public institution, becomes a mere semblance of life, in which only the bureaucracy remains as the active element. Public life gradually falls asleep, a few dozen party leaders of inexhaustible energy and boundless experience direct and rule. Among them, in reality only a dozen outstanding heads do the leading and an elite of the working class is invited from time to time to meetings where they are to applaud the speeches of the leaders, and to approve proposed resolutions unanimously—at bottom, then, a clique affair—a dictatorship, to be sure, but only the dictatorship of a handful of politicians …

the ‘russian question’ and the u.s. left

69

Yes, we can go even further: such conditions must inevitably cause a brutalization of public life: attempted assassinations, shooting of hostages, etc….

The early years of the Soviet Union saw considerable debate on the relationship between democracy and socialism, and the dangers of bureaucratization (Farber 1990). According to Anton (or Ante) Ciliga, who spent some time in a Soviet prison, as early as 1922 the Workers Group, a wing of the Workers Opposition, “considered that the alleged socialism which was being constructed under compulsion was actually bureaucratic state capitalism” (Ciliga 1946). Ciliga’s book, The Russian Enigma, appeared in Paris in 1938. This approach will be discussed in more detail below. The second main current of analysis of Soviet society is Trotskyism. Leon Trotsky began his attack on the bureaucratization of the Soviet Communist Party around 1923, and broadened this critique to include Stalin and the regime in general as Stalin proceeded to take complete control. As the main director of Stalin’s opposition, he was expelled from the Communist Party in 1927, exiled and finally assassinated by an agent of the Soviet secret police in August, 1940. In all countries where Trotsky’s ‘Left Opposition’ had adherents, they were expelled from their respective Communist Parties. In the U.S. the Left Oppositionists, led by James P. Cannon, Max Shachtman and Martin Abern, were expelled in 1928. They then founded the Communist League of America (Left Opposition) which evolved into the Socialist Workers Party (SWP). This soon became the U.S. wing of Trotsky’s new Fourth International, organized in October, 1938, in opposition to the Stalinized Third International. Trotsky wrote page after page of analysis of the Soviet system, including the important The Revolution Betrayed (1937; also see Deutscher 1964, and the extensive discussions in Hobson and Tabor 1988 and van der Linden 2007). As his views on the Soviet system shifted somewhat over the years, so did those of his followers, although not always in the same direction. Hence the intense debates within the broad Trotskyist milieu, and the continuing splits. Trotsky’s initial conception, developed in the early 1920s during the New Economic Policy (NEP), which had been designed to encourage small enterprise and private farming, was that this course opened the door to counter-revolution. If private capital came to dominate state capital, “the political process would assume … the character of the degeneration of the state apparatus in a

70

martin oppenheimer

bourgeois direction.” Combined with an increasing “bureaucratism,” the revolution would be undermined (Trotsky 1943:41, 46). After the destruction of the NEP and the collectivization of agriculture by Stalin, Trotsky explained the role of the bureaucracy in a different way. By 1932 he had concluded that “a closed bureaucratic stratum” characterized by “centrism” (neither left revolutionary nor right probourgeois, but a vacillation between them) was being created. This centrist bureaucracy “hinders by its administrative zigzags the defense of the revolution and of socialist construction” (Trotsky 1971:217). It was an independent force that, in the long run, would prepare the ground for the restoration of capitalism. Historically it was analogous to, first, Thermidor, the reactionary backlash to the French Revolution,2 and second, Bonapartism,3 a dictatorship standing above classes too weak to take power themselves, but preparing the groundwork for rule by the bourgeoisie. Meanwhile, however, the Stalin regime had completely crushed the last vestiges of bourgeois economic forms. This meant, for Trotsky, that the Soviet Union remained a ‘proletarian state’ after all despite its bureaucratic ‘degeneration.’ Hence, a degenerated workers’ state, the formulation that was cast in stone in the founding document of the Fourth International, The Death Agony of Capitalism and the Tasks of the Fourth International, most of which was written by Trotsky himself in 1938 (1946:47 emphasis in original): “The USSR thus embodies terrific contradictions. But it still remains a degenerated workers’ state…The political prognosis has an alternative character: either the bureaucracy, becoming ever more the organ of the world bourgeoisie in the workers’ state will overthrow the new forms of property and plunge the country back to capitalism; or the working class will crush the bureaucracy and open the way to socialism.” Insofar as neither alternative had yet occurred, the USSR continued to be in a transitional state. With war on the immediate horizon, the Trotskyist position seemed, superficially, to be contradictory: no support for the bourgeois states in a war against fascism, but unconditional defense of the USSR, since it was still a workers’ state, no matter how degenerated. As Hobson and Tabor describe it (1988:272 emphasis added), “this meant that the

2 What, in the sociology of social movements, is roughly equivalent to the ‘routinization’ or ‘institutionalization’ stage. 3 A concept elaborated by Marx (1852).

the ‘russian question’ and the u.s. left

71

International would support Russia against any country it might be at war with, without demanding a prior reform of the Stalinist regime, but also without giving up its opposition to the regime.” Meanwhile, a third kind of analysis had appeared in the context of a battle within Trotskyism in response to the Russo-Finnish wars, in effect in opposition to the above thesis. In August, 1939, Stalin and Hitler signed a nonaggression pact and divided Poland between them, signaling the beginning of World War II in Europe. In November, Stalin went to war against Finland, ostensibly to prevent Finland from becoming a launching pad for an imperialist attack on the Soviet Union. As Soviet and Finnish troops hammered each other in the bitter cold of that winter, the Trotskyist movement abroad confronted the question of what position should be taken on the war, and specifically, should the Soviet Union be defended? Trotsky supported the Soviet Union, but a group of dissenters in his movement took a stance that was, in effect, neutral in the war between two similarly imperialistic and class-ruled societies. There were two Russo-Finnish wars: the ‘Winter War’ of 1939–1940, and the ‘Continuation War’ of 1941–44. Finland joined Germany when the latter attacked the USSR in June 1941. By that time, Trotsky was dead. His followers continued to defend the Soviet Union. As early as 1938, however, some members of the SWP had already been moving toward a position that rejected the theory that the Soviet Union was any sort of workers’ state, arguing that the Stalin bureaucracy was actually counterrevolutionary because the proletariat no longer had any say in running ‘its’ state. In April, 1940, the Trotskyists split, with a faction that included this earlier group plus others forming a new group called the Workers’ Party (WP). This group was led by Max Shachtman, formerly a close comrade of Trotsky. When the Nazis invaded the Soviet Union, the majority in the WP closed ranks against any defense of the Stalin regime, and, after the US entered the war that December, against any support for this ‘imperialist’ war.4

4 The SWP had other problems as well. Following the passage of the Smith Act, which outlawed conspiring to overthrow the government by force and violence among other things, 28 people including the leader of the SWP, James P. Cannon, and the leadership of Teamsters Local 544 went on trial in Minneapolis in October, 1941. Twenty three were convicted and went to prison for terms of either 12 or 14 months. The Communist Party, against which the Smith Act would later be used, applauded the government’s action.

72

martin oppenheimer

Shachtman considered the Soviet Union to be a new kind of social system called bureaucratic collectivism. As he developed the concept over several years, it appeared, at first glance, to be a revision of orthodox Marxism because in classical Marxist theory bureaucracies could not be anything but structures dependent upon a class base rooted in some form of property ownership. So if in the USSR Stalin had eradicated private property and all capital had been ‘collectivized’ under the ownership of the state, then it followed the only possible alternative to a capitalist state was a workers’ state since that was the only class in existence (now that the private land-holding peasantry had been liquidated). Trotsky, following this tradition, put it this way (quoted in Shachtman 1962:38): The character of the social regime is determined first of all by the property relations. The nationalization of the land, of the means of production and exchange, with the monopoly of foreign trade in the hands of the state, constitutes the bases of the social order of the USSR … By these property relations, lying at the basis of class relations, is determined for us the nature of the Soviet Union as a proletarian state.

But Shachtman, while accepting Trotsky’s description of the facts, came to a different conclusion (1962:44, 46 emphasis added): The social rule of the proletariat cannot express itself in private ownership of capital, but only in its ‘ownership’ of the state in whose hands is concentrated all the decisive economic power. Hence, its social power lies in its political power. In bourgeois society, the two can be and are divorced; in the proletarian state, they are inseparable … In the Soviet Union the proletarian is master of property only if he is master of the state which is its repository… (therefore the) political expropriation of the proletariat … is nothing more or less than the destruction of the class rule of the workers, the end of the Soviet Union as a workers’ state.

The theory of bureaucratic collectivism stated that a new ruling class had developed in the Soviet Union. This new class was neither a bourgeoisie nor a working class, but against them both and for itself, as a collectivity, that is, in control of a state that owned and controlled the economy. It was a third alternative to both capitalism and socialism. It was the development of this new form of dictatorship that Luxemburg, Ciliga, and for that matter the entire anarchist movement had feared.5 The term itself was apparently coined by one Bruno Rizzi (“Bruno R.”), 5

See, for example, Woodcock, 1944.

the ‘russian question’ and the u.s. left

73

whose book, La Bureaucratisation du Monde, appeared in Paris in 1939, a year after Ciliga’s The Russian Enigma. However, Rizzi favored the development of rational, planned states, including the New Deal, Stalinism, and Mussolini’s fascism, as an alternative to a decaying capitalism. (For further discussion, see Haberkorn and Lipow (1996), Appendix A, 175–182). The idea that a ‘New Class’ had appeared not only in Stalinist Russia but in other regimes as different as Britain’s Labor government and Hitler’s dictatorship, soon had an impact on Shachtman’s Workers’ Party. James Burnham, one of Shachtman’s original comrades in the split from the SWP, resigned from the WP almost immediately after its formation, having taken bureaucratic collectivist theory to what he considered its logical conclusion. In his letter of resignation dated May 2, 1940, he said (in Trotsky 1942:207): Not only do I believe it meaningless to say that ‘socialism is inevitable’ and false that socialism is ‘the only alternative to capitalism’; I consider that on the basis of the evidence now available to us a new form of exploitation (what I call ‘managerial society’) is not only possible as an alternative to capitalism but is a more probable outcome of the present period than socialism.

He then wrote The Managerial Revolution (Burnham 1941:42) in which he argued that: The economic framework in which the social dominance of the managers will be assured is based upon the state ownership of the major instruments of production … the state… will … be the ‘property’ of the managers. And that will be quite enough to place them in the position of the ruling class.

Burnham’s position was that managerial society was not restricted to Russia. Fascist Germany and the New Deal, he said, also represented advanced stages of managerial society. This line of reasoning implied that any development in this direction must necessarily be opposed, even if it took the form of a benign social democratic state. Hence, politically, this led Burnham into the camp of conservatism. Another ex-Trotskyite, Dwight Macdonald, had meanwhile also struck out on his own, and in the midst of the war organized a peppy anti-war ‘libertarian’ magazine called Politics. In a series entitled “The Root Is Man,” first published in April, 1946 (1953:27, also 1995:70) Macdonald wrote that “a form of society has come into being which is not Socialism but rather an even more oppressive form of class society

74

martin oppenheimer

than Capitalism and yet which has resolved those economic contradictions on which Marx based his expectations of progress to socialism. It is a ‘third alternative’ to both capitalism and socialism.” Like Burnham, Macdonald also threw Keynsian economic policies and the postwar nationalization trend in Labor Britain into the bureaucratic collectivist pot but he did not follow Burnham into the conservative camp. Macdonald continued to hold out hope for an alternative, leftlibertarian vision. Since this volume focuses on the concept of State Capitalism, it seems important to pay attention to this analysis of Soviet-style societies as it developed within the anti-Stalinist left.6 This was the proposition that the USSR was a ‘state capitalist’ society. A group within Shachtman’s Workers’ Party, led by C.L.R. James and Raya Dunayevskaya (the “Johnson-Forest Tendency”) proposed that the ‘capital-labor relationship,’ that is, the nature of social relations in the workplace, insofar as this is characterized by exploitation, was similar in both Stalinist and capitalist societies. Investment decisions are made by the state. Production for profit—the profit of the state—occurs. Instead of many capitalists, as in capitalism, there is only one capitalist: the state (van der Linden 2009:110–116). Hence the term ‘state capitalism.’ This is a description that Shachtman would not have contested, as far as it goes. Yet, for the Shachtmanites, the absence of a capitalist class meant that there could not be a capitalist economy, even though the hierarchical division of labor and close supervision typical of capitalist enterprises existed. These forms of exploitation can exist in other class systems. The capitalist imperative to invest, reinvest, and grow constantly for the sake, ultimately, of individual profit (filtered through corporations, banks, etc.) did not exist in the USSR. The use of surplus was at the command of politics, the political needs of the bureaucratic state and its collective leadership. In contrast, in capitalism the dynamic of private profit commands politics, although political exigencies do interfere from time to time. The other argument against the ‘state capitalism’ formulation is that it has often conflated qualitatively different social systems, as is clear

6 This chapter will not describe the continuing debates within and between Trotskyist groups concerning the nature of post-1945 Eastern European societies, which some called ‘deformed’ workers’ states. For a detailed discussion of this and other Left conceptions of these societies see van der Linden (2007; 2009).

the ‘russian question’ and the u.s. left

75

from some of the other contributions to this volume. The term has historically been used not only when the state owns and controls the entire economy, but also when the state ‘interferes’ or regulates, or even nationalizes economic enterprises under capitalism. This has happened under the New Deal, under labor governments as well as under fascism, none of which has challenged the existence of a system of profit for individuals and private corporations. The term ‘state capitalism’ has been used when the bourgeois state temporarily takes charge of the economy in greater or lesser degree. But it is still a bourgeois state. The contrast is clear: in a statist society such as the USSR, the capitalist class is destroyed. The fact that some small businesses existed in some countries of the Soviet bloc, for example Czechoslovakia, is irrelevant since they were insignificant in the larger economy. Without capitalists as the dominant economic class there cannot be a capitalist state. There can be transitional periods, for example after the collapse of the USSR, when it is not (yet) clear whether private capitalists or state bureaucrats are dominant. Indeed, there may be partnerships between the two in which the privileges of both are protected by a still powerful bureaucracy that guarantees the success of its private partner, and its own survival, by suppressing labor. But as capital becomes ever more powerful, the state increasingly becomes a state over which the bourgeoisie conquers “for itself … exclusive political sway” (Marx and Engels, 1948:Part I, 11. Orig. 1848). Hence a capitalist state. The ‘Johnson-Forest Tendency’ that is associated with the state capitalist framework within the US Left had initially split from the SWP with the Shachtmanites, later rejoined, then went out on their own in 1950. C.L.R. James was a West Indian intellectual who wrote numerous books on many topics including Herman Melville and cricket, but his best-known work, in the same league as Trotsky’s History of the Russian Revolution (1932) was undoubtedly The Black Jacobins: Toussaint L’Overture and the San Domingo Revolution (1963:orig. 1938). Raya Dunayevskaya was a political philosopher whose project focused on the early Marx and his humanistic outlook. In 1953 James was deported, a victim of McCarthyism, and their organization, called Correspondence, soon split. James’ followers’ group, Facing Reality, is now defunct. Dunayevskaya’s group publishes News and Letters. The Facing Reality group had some influence among African-American activists in Detroit in the 1960s, particularly with the Dodge Revolutionary Union

76

martin oppenheimer

Movement which was affiliated with the League of Revolutionary Black Workers.7 Looking back, was the distinction between bureaucratic collectivism and state capitalism worth the acrimony and the splits among the ex-Trotskyists? Probably not, but as the ‘Old Left’ declined, it seemed that the smaller the political stakes, the more vicious the battles. In the context of World War II, however, most people on the left preferred to be agnostic about the precise nature of the Soviet state, our ally in the struggle against fascism. The Workers’ Party’s anti-war position was distinctly in the minority within the broader left, the vast majority of which, if we include the Communist Party and its periphery, supported the war effort. Irving Howe’s verdict (1978:184) that “Trotsky’s stand on the war had not the slightest practical consequence” could as well be extended not only to the Shachtmanites but to the entire anti-war left during World War II, including the pacifists in the Socialist Party. The ‘new class’ idea finally emerged from the relative obscurity of left sectarian debates in 1957 when The New York Times and Frederick A. Praeger, publisher, discovered Milovan Djilas, a former comrade of dictator Josip Broz Tito, in a Yugoslav prison. Djilas, who apparently had some access to archives that included the writings of Trotsky, laid out a theory of a ‘new class’ in terms virtually identical to those of Shachtman. First as a series in the Times (July, 1957) and then in his book The New Class, Djilas proclaimed that “in contemporary Communism a new owning and exploiting class is involved and not merely a temporary dictatorship and an arbitrary bureaucracy” (1957:54). Most of those who read and reviewed The New Class were unaware of the earlier history of this theory. The book was treated as just another ‘exposé’ of the evils of Communism. By then the Workers’ Party had changed its name to the Independent Socialist League (ISL), and with a long list of other groups, both Stalinist and anti-Stalinist (including the ISL’s youth group), found itself on what was called the “Attorney General’s List of Subversive Organizations” (Executive Order 10450). Eventually the list was declared unconstitutional, but not before many people, directly or indirectly associated with these groups, lost their jobs or suffered other social and economic consequences.

7

For more on the League, see Georgakas (1998:436–439).

the ‘russian question’ and the u.s. left

77

The long-term impact of ‘The Russian Question’ on the US left will be a subject of debate for a handful of specialist historians for some time to come. But the short-term impact was more significant. Although Trotsky and his followers were not the first to expose the Stalinist state for what it was, they were clearly instrumental in educating large numbers of the left-oriented in the 1930s as to what was going on. When Trotsky arrived in his Mexican exile in January, 1937, he called for an international commission of inquiry into the Moscow purge trials. Such a group was indeed convened, headed by the wellknown educator and philosopher John Dewey. Five members of this commission went to Trotsky’s home in Coyoacan, and held hearings from April 10–17, 1937. Trotsky had been convicted in absentia, and the charges against him were duly examined. Almost needless to say, the commission “concluded that the Moscow trials were frame-ups and Trotsky and Sedov [his son: M.O.] were not guilty of the eighteen specific charges …” (Novak 1968:xi). Despite these events, many ‘progressives,’ and not only members of the Communist Party, remained astonishingly naïve about the Soviet Union until after the war, some until Krushchev’s ‘revelations’ in 1956, and a few even until this day. The concept of ‘third camp socialism’ (neither Washington nor Moscow) continued to be a minor note on the left, despite the work of such publications as Partisan Review (in its late 1930s incarnation), Politics (in the 1940s), Dissent (especially during the McCarthy period), and New Politics (beginning in 1961). This naiveté had an impact on the student New Left as well. Certainly their leaders were right in attacking the ‘unreasoning’ anti-communist crusade that was being used to sell U.S. militarism and quash political dissent. But they were also antagonistic to what they saw as the overly zealous anti-communism of Leftists who had long fought the Communist Party. These were sometimes shrill to say the least (SDS 1964:30). This led some of the New Left to be ‘anti-anti-communist,’ which blinded them to the less pleasant realities of such regimes as Mao’s China, ‘Uncle Ho’s’ North Vietnam, or Castro’s Cuba.8 The uncritical love affair of many veterans of the New Left with Cuba

8 The SDS founding document, The Port Huron Statement, states clearly that: “As democrats we are in basic opposition to the communist system.” However, this rhetoric was likely inserted to mollify its parent organization, the League for Industrial Democracy, a staunchly anti-Stalinist group, which later expelled them anyway (Isserman 1987:209–211).

78

martin oppenheimer

continues to this day. These societies are, or were, after all, some version of bureaucratic collectivism or state capitalism, or, in some views, degenerated or deformed workers’ states. But socialist they were, and are, not, despite their rhetoric. Few of the New Left had much of a handle on such theoretical matters in those days, with the exception of those who had contact with such third camp organizations (in the late 1950s and early 1960s) as the Student Peace Union, the Young People’s Socialist League, the Young Socialist League or (in Berkeley) with the Independent Socialist Club.9 Today the ‘Russian Question’ and the heated arguments around it seem almost quaint. Most socialist organizations today are agnostic about the ‘state capitalism’ vs. ‘bureaucratic collectivism’ issue and regard it as unnecessarily divisive. It is difficult to share Michael Harrington’s optimistic view (quoted in Isserman 1987: 65) that the ideas debated in such organizations as the Young Socialist League (of which I was a member) had much influence on the movements of the 1960s. It is possible, however, that these ideas may reemerge in current debates about the nature of ‘post-Soviet’ societies. These societies are in transition. What they are in transition from is fairly clear, regardless of the terminology. What they are now and where their transition is going is a matter for others in this volume to discuss. References Arendt, Hannah. 1958. The Origins of Totalitarianism. Cleveland and New York: Meridian. Bauer, Raymond, and Alex Inkeles and Clyde Kluckhohn. 1956. How the Soviet System Works. Cambridge, Mass.: Harvard University Press; also 1961, New York: Vintage. Ciliga, Anton. 1946. “A Talk With Lenin in Stalin’s Prison.” Politics August. Deutscher, Isaac, ed. 1964. The Age of Permanent Revolution: A Trotsky Anthology. New York: Dell. Djilas, Milovan. 1957. The New Class. New York: Frederick A. Praeger. Farber, Samuel. 1990. Before Stalinism: The Rise and Fall of Soviet Democracy. London, New York: Verso. Georgakas, Dan. 1998. “League of Revolutionary Black Workers.” Encyclopedia of the American Left. New York: Oxford University. Haberkorn, Ernest E. and Arthur Lipow, eds. 1996. Neither Capitalism Nor Socialism: Theories of Bureaucratic Collectivism. Atlantic Highlands, N.J.: Humanities.

9 Today’s publications Labor Notes and Against the Current, and several small left socialist groups including ‘Solidarity,’ are traceable to this third camp tradition (Phelps 1998:348–351).

the ‘russian question’ and the u.s. left

79

Harrington, Michael. 1972. Fragments of the Century. New York: Saturday Review. Hobson Christopher Z. and Ronald D. Tabor. 1988. Trotskyism and the Dilemma of Socialism. New York: Greenwood. Howe, Irving. 1978. Leon Trotsky. New York: Viking. Isserman, Maurice. 1987. If I Had a Hammer: The Death of the Old Left and the Birth of the New Left. New York: Basic. James, C.L.R. 1963. The Black Jacobins. New York: Vintage. Khrushchev, Nikita S. 1956. Special Report To the 20th Congress of the Communist Party of the Soviet Union. New York: The New Leader special issue, n.d. Luxemburg, Rosa. 1940. The Russian Revolution. New York: Workers Age. Also, 1961, with Leninism or Marxism? Ann Arbor: University of Michigan. Macdonald, Dwight. 1953. The Root Is Man. Alhambra, Cal.: Cunningham Press. Also 1995, Brooklyn: Autonomedia. Marx, Karl. 1975 [1852]. The Eighteenth Brumaire of Louis Bonaparte. New York: International Publishers. Marx, Karl and Frederick Engels. 1948 [1848]. The Communist Manifesto. New York: International Publishers. Novak, George. 1968. Introduction to The Case of Leon Trotsky: Report of Hearings. New York: Merit. Orig. published 1938 as Not Guilty. New York: Harper. Oppenheimer, Martin. 1997. “Social Scientists and War Criminals.” New Politics 1(3): 77–87. —— . 2000. The State in Modern Society. Amherst, NY: Humanity Books. —— . 2009. “Some Comments on ‘State Capitalism.’ ” Critical Sociology 35(3): 435–437. Oppenheimer, Martin and Evan Stark. 1998. “Sociology.” Encyclopedia of the American Left. New York: Oxford. Phelps, Christopher. 1998. “Independent Socialist Clubs/International Socialists.” Encyclopedia of the American Left. New York: Oxford. Schueller, George K. 1951. The Politburo. Stanford, CA: Hoover Institute and Library of War, Revolution and Peace. Shachtman, Max. 1962. The Bureaucratic Revolution: The Rise of the Stalinist State. New York: Donald. Students for a Democratic Society. 1964. The Port Huron Statement. New York: Students for a Democratic Society. Orig. mimeographed, 1962. Trotsky, Leon. 1932. The History of the Russian Revolution. New York: Simon and Schuster. —— . 1937. The Revolution Betrayed. New York: Doubleday. —— . 1942. In Defense of Marxism (Against the Petty-Bourgeois Opposition). New York: Pioneer. —— . 1943. The New Course. New York: New International. Orig. 1923. —— . 1946 [1938]. The Death Agony of Capitalism and the Tasks of the Fourth International. New York: Pioneer. —— . 1971 [1932]. The Struggle Against Fascism in Germany. New York: Pathfinder. van den Linden, Marcel. 2007 and 2009. Western Marxism and the Soviet Union. Leiden, The Netherlands: Brill Academic Publishers and Chicago: Haymarket Books. Woodcock, George. 1944. Anarchy Or Chaos. London: Freedom.

CHAPTER FIVE

PLANNING AND THE FATE OF DEMOCRACY: STATE, CAPITAL, AND GOVERNANCE IN POST-INDEPENDENCE INDIA§ D. Parthasarathy Introduction Processes of economic liberalization, deregulation and privatization, and opening up of the markets to global capital have thrown up interesting debates in India over the last two decades. While most political parties in India seem to have arrived at a consensus on the need for economic reform and liberalization, there is also fairly strong opposition to these changes from new social movements and peoples’ organizations. However, some leaders and spokespersons for the dalits – the ex untouchables – in India have welcomed these processes for their perceived ability to modernize society and the economy and destroy the remnant feudal and traditional social structure – which are seen as the agents of oppression, exploitation and domination over dalits, the adivasi (tribal or indigenous) population, and women1. Such a position also stems from their perception of the state in India which they believe to have been captured by upper caste elites and is therefore no longer capable of bringing about social change and reform through the social engineering approaches favored in the decades after

§ Revised version of paper presented at the 56th Annual Meeting of the Association for Asian Studies, San Diego, California, 4–7 March 2004. I am grateful to the Association of Asian Studies for a ‘Border Crossing’ travel grant which enabled me to present my paper at the conference. I wish to thank Douglas Hill for detailed comments on an earlier draft. Casual discussions with Rahul Mukherji and an exposure to his work helped me gain confidence in expressing my arguments. A Visiting Senior Research Fellowship at the Asia Research Institute, Singapore, provided access to many readings enabling me to take a more informed position. I deeply appreciate Vincent Pollard’s patience and his advice and comments on my work. 1 Among others, the scholarly and journalistic writing of the sociologist Gail Omvedt has been the most visible and also the target of criticism by those who disagree with this position.

82

d. parthasarathy

independence. Contrastingly, scholars and activists opposed to the new ‘good governance’ programs that are being imposed to accompany the structural adjustment and economic liberalization programs, still put their faith in the state as the most important agent capable of ensuring that the rights of the poor and the marginalized are protected in a deeply divided and hierarchical society (Jayal and Pai 2001; Harriss 2002; Byres 1999b). For them, ‘good governance’ approaches give too much importance to ‘civil society’ which, in India, is seen to be part of the problem rather than the solution to democratization and development problems. While identifying all sorts of developmental problems more or less accurately, the solutions advocated are usually statecentered – a quite traditional Marxist ‘public sector’ approach to development. A third important strand in the debates emerges from the perspectives and approaches of the new social movements and peoples’ struggles that are leading fights against globalization and liberalization because their members believe that these further impoverish and marginalize the poor and the disprivileged masses in India. These movements critique the state for colluding with neo-imperial and capitalist/elite interests in launching huge developmental projects that displace millions of the poor, deprive them of their sources of livelihood, and take away their basic rights2. While making use of the state as well as global alliances, such movements critique both the role of the state and of the forces of globalization for their adverse development approaches. This chapter sets itself in the context of these debates to develop a perspective on state capitalism based on the Indian experience. Since the time of independence from British colonial rule, to the decade of the 1980s, the Indian economy adopted a ‘mixed economy’ approach, with a regulated private sector, and a large public sector. The Bombay Plan of 1944 (prepared by a group of leading capitalists - industrialists) provided an outline of the planning process that influenced the NehruMahalnobis model of ‘socialist’ development and ‘democratic planning.’ A financial crisis in 1966 failed to open up the economy sufficiently due to strong opposition from big business, though there was a short lived trade liberalization. Nationalization of financial institutions in the late 1960s and early 1970s resulted in the rise of state

2 The National Alliance of Peoples Movements in India which is an umbrella body, represents this perspective.

planning and the fate of democracy

83

capital, and industrial licensing policy became more stringent, a phase that lasted till the early 1990s when deregulation, privatization of the public sector, and easing of entry norms for foreign capital occurred. Some pro-business deregulation and liberalization did occur in the 1980s but external competition was still not permitted. After the 1991 ‘opening-up,’ a loose coalition of big Indian capital (the ‘Bombay Club’) asked for government ‘protection’ in the face of market reforms. From time to time, there have been minor and major pressures from different sections within and outside the country contesting and seeking to modify or reform India’s economic strategies. In this chapter I link the economic transformation of India in the post-independence period to its implications for democracy in the context of inequality and hierarchy. Continuing attacks on democratic institutions, rights and citizenship are shown as a consequence of new models of governance that emerged in the context of economic liberalization. I present here an overview of the historical and structural obstacles facing an indigenous thrust towards capitalism by Indian capitalist classes, and their use of the state in overcoming these barriers. Developing an approach to better understand the specific form of social organization in India which provides the base for surplus extraction and capital accumulation, I stress in this chapter the continuities across different regulatory phases that reveal the inability of major sections of Indian capital to extract surplus and accumulate purely through market mechanisms, but are instead forced to rely on the state for this purpose. At the same time, sections of indigenous capital that face constraints on their own expansion due to this approach, ally with foreign capital to take on state capitalist designs. This chapter analyzes governance changes affecting industrial legislation, and land/urban planning, as important aspects of state capitalism from an Indian perspective, and offers important insights regarding the nature of Indian capital. The state capitalism debate has been a part of the larger debates on India’s growth trajectory and economic models since the 1950s. However, the debate has never become mainstream and is hardly reflected in current social science debates. While a few scholars, such as A.K.Bagchi, Partha Chatterjee, and Nasir Tyabji have done some pioneering work, their work has not had much influence either on policies or on later academic work, especially in development economics, and political economy. Recent studies on the anthropology of the state in India have not really attempted a class or economic analysis of the state and its importance for capitalist growth in developing

84

d. parthasarathy

countries, nor even come remotely close to the ‘fiscal sociology’ approaches of Latin America. The migration of Marxist scholars to post-modern themes and approaches and the going-out-of-fashion of Marxist approaches, in both academia and politics, have also contributed to the lack of serious studies (with some important exceptions) on the linkages between economic change and the changing role of the state during economic liberalization and globalization. The fairly strong disciplinary orientation of Indian academics has also meant that historians have confined themselves to the pre-independence period while economists (except for a few with an interest in economic history) have studied the present, and other social scientists have rarely reflected on the implications of the state and capitalism debates for their own areas of research. This chapter attempts to pull together different strands of the ongoing debate and offer a coherent argument regarding the changing role of the state from the ‘socialist’ planning period to the current liberalization period and what it means for capital, and for different strands of the capitalist class, especially big business. By tracing the role of oligopoly and big business in significantly influencing processes of economic change in India both during the planning period beginning in the 1950s and the transition to economic liberalization since the mid 1980s, I argue that, while economic transformation in the postindependence period involved shifts in the language and rhetoric on ‘development’ from ‘socialist’ to ‘liberal-capitalist’ ideology, assaults on the poor, socially marginalized, and the working class, and their rights, represent a continuation with earlier policies and models of planning that largely benefited propertied groups even while systematically eroding the rights of citizens, and excluding large masses of people from ‘development.’ An assessment of this provides significant insights into the nature of the bourgeois democratic revolution that accompanied decolonization in India. Capitalist elites and industry associations in India have always had a critical influence on state policies for changing their political and economic fortunes. The Bombay Plan of 1944 (prepared by a group of leading capitalists-industrialists), provided an outline of the planning process that India was to adopt later, and influenced the NehruMahalnobis model of ‘socialist’ development and ‘democratic planning.’ Financial and economic crises of various kinds notwithstanding, forms of state intervention in licensing, financing, and labor relations continued to a greater or lesser extent until the mid 1980s. In the early

planning and the fate of democracy

85

1990s, a new ‘Bombay Club,’ floated by a loose coalition of industrialists, asked for government protection and a level playing field in the face of liberalization and globalization. Faced with historical and social structural obstacles in an indigenous thrust towards capitalism, Indian merchant and capitalist classes have always attempted to use the state in overcoming these barriers. This chapter compares the policy changes and development strategies across the planning and liberalization periods. I suggest that the changes do not really represent a transition from a ‘socialist’ to an open market model, but rather reflect the changing needs, strategies and methods of Indian capitalists in coping with, and warding off, threats from international capital, and, more importantly, facilitating their own growth and rise to dominance while at the same time ensuring the suppression of movements and associations representing working class interests that threaten their dominance. In subsequent sections, I elaborate on these arguments by focusing on specific cases wherein the state, under processes of liberalization, continues to act in a partisan manner in the interests of the capitalist elite and urban professional middle classes, and planning and state intervention are used to strengthen their own positions while excluding the working classes and the poor and underemployed from benefiting from economic changes even as the elite sports the rhetoric and language of free markets and of the benefits of privatization and deregulation. A key argument advanced in this chapter is that any theoretical understanding of ‘state capitalism’ requires, as one of its basic premises, a comprehension of the motives for state intervention in economic processes and relations, and the benefits that various dominant fractions of a social formation stand to gain from this intervention. In the Indian case, a social formation dominated by a hierarchical social structure has defined economic relations and growth trajectories for centuries as recognized even in the classical works of Marx and Weber. Much of the economic analysis (from Marxist and non-Marxist perspectives) has largely ignored this aspect in contributing to the debates on economic planning and liberalization. Adopting a sociological perspective, rather than a straightforward political economy approach, the argument advanced here is that the nature of indigenous capital in India is different from that of Europe and North America, that capital is influenced to a large degree by its social origins and caste location, by persisting rural-urban, feudal-capital linkages, and that this imposes certain constraints on economic organization, and capitalist behavior,

86

d. parthasarathy

such that returns to capital can be assured only with the active support of the state. It is also argued that the maintenance of social dominance through sustaining access to power, is key to explaining both the kind of labor relations that prevail in the Indian context, and the nature of capital investments – the forms of economic organization, the mode of extraction of surplus, the changes in the means of production – the character of Indian capitalism itself. All these are uniquely linked to the caste structure that is such an important part of its social formation. Prominent literature on the state and economic development in India (e.g., the volumes edited by T.J.Byres on development planning) rarely pays attention to the dimension of caste in the formation of classes, and in determining models of economic growth and industrialization. This chapter thus departs from mainstream Marxist analysis of Indian economy, and draws partly from the semi-feudal, semi-colonial characterization of Indian social formation by the Indian Maoist movement3, and partly from the state capitalist theoretical strain promoted by Kalecki that became popular among a few Indian economists in the 1960s and 1970s. Illustrations are drawn with specific reference to a) the management of labor relations, and whittling down of workers’ rights through legislative changes and judicial pronouncements, and b) urban/spatial planning and restructuring processes, where elite/liberal discourses – contra market and neo-liberal thrusts – clearly echo ‘planning’ approaches, and spatial strategies get linked up with surplus extraction strategies. The choice of these two issues to advance the state capitalism argument is both due to prior research in these areas, as well as the clarity that they offer in pushing the specifics of the argument. In societies that go through an extended semi-feudal, semi-colonial phase, and where economic forces are still subsumed by social forces, feudal modes of control and extraction of surplus from land and labor are preferred over modes of accumulation based on technological advances and attendant social transformation which frees up labor, modernizes the labor process and ushers in modern forms of economic organization. In addition, as Bagchi points out in characterizing Indian capitalism as Bungalow-Chawl-Haveli capitalism, the economic organization 3 Pradhan H Prasad, Amit Bhaduri, and A.K.Bagchi have been some of the scholars who have elaborated on the semi-feudal, semi-colonial nature of Indian social formation and mode of production. Initial formulations were developed during the “mode of production in Indian agriculture” debate of the 1970s and 1980s.

planning and the fate of democracy

87

of businesses in India are “shaped and distorted by pervasive poverty of workers and endemic surplus of labor; a persistent status difference between different types of occupational castes; and the segmented nature of networks of information, trust and credit; and dependence of modern sectors of the Indian economy on foreign suppliers of technology and finance” (1999a:21). But state capitalism also enables another dominant class fraction to extract surplus and maintain its hegemony without the necessity of owning the means of production, without the skills required to bring together the land, labor and capital in starting an enterprise, a class that largely did not own land, controlled labor using hegemonic techniques rather than by domination, and hence never came to possess the skills required to manage land and labor efficiently. This class consists of the dominant caste of the Hindu social structure – usually from the twice born castes4 which has historically exercised hegemony over Indian society. This situation is similar to the arguments of some scholars that the public sector in India is comparable to the state capitalist system in the erstwhile Soviet Union where “exploitative use of the means of production (was) for the benefit of state elites who also determined the distribution of any surplus” (Katzenstein 2008:604). The distinctive point made here is that caste largely determines who these “state elites” are. Fearing loss of status and power in the aftermath of de-colonization and the ushering in of bourgeois democratic reforms, this group could sustain its hegemony by using the state to both extract surplus and maintain its domination over other social groups. The fact that the “bourgeois had to compromise politically … and it was forced to rely on the bureaucracy for carrying forward India’s development” (Corbridge and Harriss 2000:xx), meant that it was quite easy for this caste-class to exercise hegemony. This denotes that the state is not just an instrument or agent for the capitalist class, but that the state has interests of its own, the interests of the groups that people the state. The debates over urban planning and labor legislation reflect as much the newfound confidence of this class to do without the state in the age of globalization, as their fear of being upstaged in the face of a democratic

4 Also known as dwijas (literally twice born), these include Brahmin and Vaisya castes specializing in priestly functions, teaching, and trading/commerce. They are entitled to wear the “sacred thread,” are ritually pure and hence placed higher in the caste hierarchy both in the fourfold varna system, as well as in the jati (caste) hierarchy.

88

d. parthasarathy

upsurge from below. Before I go into this however, it is important to attempt a critical review of some of the important literature in the debates on state, economic planning, and liberalization in India. This will also involve a brief recounting of economic changes in India in the post independence period, and the role of the state in this process.

From the Bombay Plan to the Bombay Club The decade immediately following independence from British colonial rule saw a compromise between oligopolistic business houses and the state in India. The desire for “limited state regulation and protection from international trade,” (Mukherji 2009:84) along with the need to keep labor under control, “produced a regulatory regime … which was far more considerate towards the interests of Indian business” (Ibid.). Developing a historical political-economic analysis, Mukherji shows how these compromises and contradictory objectives led to the creation of industrial legislation that contributed to the “birth of industrial controls and licensing that would only be abolished in 1991” (Ibid., 85). At the same time, protectionist pressures scuttled reforms in the aftermath of the 1966 financial crisis, with strong opposition to dismantling of controls persisting for several decades afterwards. Most Marxist and neo-Marxist scholars studying economic change in postcolonial India, and others who adopt a broad political economy approach, generally favor a perspective that is cognizant of the state’s role in accumulation and capitalist transformation, even if they do not explicitly use the term state capitalism. A substantial amount of the literature uses the term ‘development planning’, which is sometimes referred to as “a feature of state capitalism in India” (Byres 1994:32–33). The Bombay Plan of 1944 (officially called A Brief Memorandum Outlining a Plan of Economic Development for India), was a plan drawn up by leading members of the Indian business community when the second world war was coming to end and Indian independence from British colonial rule was in sight. It was authored by business ‘stalwarts’ including Sir J.R.D. Tata, G.D. Birla, Sir Shri Ram, Kasturbhai Lalbhai, A.D. Shroff and John Mathai. Some of these were also members of the Viceroy’s Council in charge of the new planning and development department of the Government of India as well as of the National Planning Committee set up by the Indian National Congress which

planning and the fate of democracy

89

was in fact funded by big business. Byres comments that the “Bombay Plan of 1944 clearly saw planning as essential to the successful development of capitalism in post-colonial India” (1994:10–11). My position does not entirely agree with this view of planning as laying a groundwork for capitalism, and instead I contend that the Bombay Plan can also be seen as a part of a strategy to sustain the dominance of the old elite and their version of capitalism. Contemporary critics commented on the similarity of the Bombay Plan with the approach of the first Five Year Plan of the Government of India. There is little doubt that the Indian business community influenced the government to develop a plan to fund their profit accumulation and appropriation. Out of a total allocation of Rupees 35 billion in this plan, as much as 15 billion rupees were allocated to the private sector, ignoring the needs of 80% of the population dependent on agriculture. There is now broad agreement among historians and other scholars that, at the time of India’s independence, big business supported planning and wanted state investment to promote its own growth and to survive competition from foreign business. The common aspect of both the plans relates to ignoring redistribution issues, especially the failure to address the problem of land concentration, which leads one to assume that the Nehru-Mahalnobis approach that launched the planning process in India in the 1950s was far from ‘socialistic’ in nature. It is important to stress this. Despite the fact that there was much criticism of the Bombay Plan to the effect that “the future for investment which the authors of the Plan envisage is evidently a holy alliance between foreign capitalists and themselves on a profit-making basis, of which we have had such bitter experience in the past and in the present” (Wadia and Merchant 1945:29–30), and despite several Marxist scholars exposing its true objectives, current neo-liberals still use the socialist stick to beat Nehruvian planning for India’s economic ills. The characterization of Nehruvian economic thinking and of the Indian economy between 1947 to the early 1990s as socialist (in positive and negative terms) is so pervasive that it has even started creeping into academic discourses, not to mention the media where the image is unthinkingly projected. The Bombay Plan, while stressing the need for capital goods, technology and capital (loans) from the then imperialist countries, also emphasized the role of the State in creating infrastructure, in providing ‘created money’ in the form of massive deficit financing (to the tune of 35% of the plan funds), and in creating a public industrial

90

d. parthasarathy

sector on whose foundations the private sector would thrive. The Bombay Plan was silent both on the need for restructuring (Indian) society in terms of the abolition of feudal relations in rural areas, and the confiscation of existing imperialist capital. From this point of view, while several studies have dwelt on the above aspects of the Bombay Plan, what is important is also to view it from a class perspective. Existing literature on the relationship between the capitalist class and state intervention in the economic sphere in India has usually dwelt on the role of the state for facilitating capitalist development, and the inability of the capitalist class in India to survive, enrich itself, and grow in the absence of state support (Mukherji 2007; Bagchi 1989; Patnaik 1995). A few of the studies also mention the capitalist class’ need to control the state to protect itself from the predations of transnational capital, akin to the “external competition” argument advanced by Hasan (2008:576) in studying state capitalism in communist Russia. However, few mention the classic need of the capitalists to control the state as a ‘ruling class’ – that is, to exercise domination over society and repress class struggles. Only occasional references to this aspect can be found in the literature on state intervention in the economy. Patnaik points to the ways in which state intervention was designed to benefit specific classes (1995), and Mukherjee in a brief discussion of the Bombay Plan writes of it as “a scheme….. of preventing a socialist order from taking its (capitalism’s) place” (Mukherjee 2002:404). A major objective of this chapter is to show that the preservation of class domination and the need to repress workers’ struggles that threaten capitalist domination are key factors in the emergence of state capitalism, as are the strategies used by big business to gain control over and influence the state. The Bombay Plan makes this very clear wherein, under the guise of preventing “the inequitable distribution of the burden between different classes” (Thakurdas et al. 1944) that will actually be the outcome of the planning process outlined, the authors state that “practically every aspect of economic life will have to be so rigorously controlled by government that individual liberty and freedom of enterprise will suffer a temporary eclipse” (Ibid.). It seems quite facetious to blame socialism for the lack of enterprise during India’s planning period, when leading industrialists themselves see restrictions on freedom of enterprise as desirable to achieve certain long-term objectives. The practical consequences of this approach became clear as regards industrial relations and the labor process, where it has been cogently argued that

planning and the fate of democracy

91

restrictions on trade unions, on collective bargaining and other workers’ rights, accompanied a traditional, non-modern, non-capitalist labor process during the planning period in much of India’s corporate sector. With respect to the large textile sector in India, Tyabji states that the “Indian innovation system was silent … on the modernization of the system of industrial relations” (1999:38), and that the “framework for the legal structure of industrial relations” was set by the “objective of preventing the communist domination of textile workers” (Tyabji 2000:148). Tyabji and others have argued that this was a major reason for the failure of planning, such as it was, and the lack of economic growth and low rates of technical efficiency and productivity in Indian manufacturing which Indian industrialists liked to blame, and still do blame, on the ‘laziness of the natives’5. Tyabji goes on to argue that in India, “the ‘making of the working class’ was also the process of the making of industrialists.” The “way in which the industrialists themselves evolved as a social group … through … contestation … with competing industrialists and, … in relationship to the working class,” resulted in “specific forms of workers’ subordination to the power of industrial managers … (which) was expressed both in the organisation of work and authority (management practices) within the firm, and in the structure of industrial relations legislation” (Tyabji 1999:37). The result has been that “the labor process in Indian industry as a whole has not developed even to the stage of Taylorism” (Tyabji 2000:148). Writing on the barriers to capitalist transformation of the Indian economy, he mentions that certain “ingrained features, of firm-level management practices and industrylevel industrial relations, set limits to the effect that market competition alone could have on building pressures for technologically productive change, unless the historically determined issues were simultaneously addressed” (Tyabji 1999:38, emphasis added). Those who characterize the Indian state as a semi-feudal state also similarly point to the “formidable obstacles to full transition to capitalism constituted by semi-feudal structures and relationships” (Byres 1994:39). The preferred form of economic organization, rooted in the Hindu joint family, and tied to kinship, caste and community networks, not

5 The spokesperson and the founder of the Bombay Club, Rahul Bajaj, is quoted as stating, “Why should I be called incompetent because my government’s support policy and the labor there doesn’t work?” (Bajaj 1999).

92

d. parthasarathy

only influenced business decision-making, but also types of investment, expansion strategies, and innovation capacities (Bagchi 1999a; Chandrasekhar 1999). Chandrasekhar attributes “emergence and consolidation of the ‘business group’ or ‘house’, as the representative unit of oligopoly in the industrial sector” in India to “the process of premature monopolization” (1999:235). Citing a study of a major business house in India in the first half of the twentieth century, Morris points out “a new managing agency was set up for each new enterprise he promoted,” which was also a “mechanism by which (he could) provide annuities for members of his extended family” (1987:154). Mukherji (2007) explains how attempts to abolish the managing agency system in the immediate post-colonial aftermath were strongly opposed by big business and ultimately scuttled. The overall impact was a “Hindu rate of growth” – low by international standards. Where surplus extraction and labor relations were concerned, state intervention, political control in alliance with political parties, and feudal modes were preferred, leading to a lack of technological modernization and dynamism – which would have required more modern labor processes, and greater freedom and mobility for labor. This led to a stability of the specific structure of oligopoly in India which, as Chandrasekhar argues, “was based on a particular relationship between firms, markets, and the state shaped by the specific nature of Indian monopoly, the circumstances of the time, and the inevitable features of extremely belated industrialization in an ex-colonial country” (1999:236). Such an argument, while being largely accurate, fails to consider caste networks, caste as an enabler or facilitator of oligopoly, and caste as inculcating an inability to face competition; it does not consider rural-urban networks of capital and how these influence the structure of oligopoly, the relationship between firms, classes, and the state, and labor processes. The latter is particularly important if one is to understand and explain the “changes during 1970–90 (that) undermined the stability of the traditional oligopolisitic structure” (Ibid., 240), and opened up the space for foreign capital to make a re-entry; for both the new professional classes as well as agrarian capital preferred a different relationship between and with the state and international capital. (Agrarian capital wanted a continuance of subsidies apart from influencing the state to not implement agrarian reforms.) This oversight can also be found in the work of political scientists like Sudipta Kaviraj who argue that despite “global dominance of ideas of liberalization,” “the enchantment of the state” (2005:263) has not diminished but has instead grown.

planning and the fate of democracy

93

Kaviraj’s explanation, however, elides the increasing use of the state by the bourgeoisie and the middle classes in India, does not consider the notion of an oligopoly and the implications for a class state, and, despite a sensitivity to the deep enchantment of the Indian state among the poor and the lower castes, has little scope for elaborating the notion of an oligopolistic, caste-based, economic elite. For Indian business leaders, choice of sectors for investment, choice of techniques, and choice of locations were all determined not by ‘market’ conditions, but by the need to maintain one’s social, political, and economic dominance using state intervention and extra-economic methods. An important development that is usually missing in academic debates is the rural-urban nexus in state intervention in the economy. It was not just the urban industrial bourgeoisie who benefited from state capitalism. The typically Indian term of ‘omission and commission’ aptly describes the processes through which the dominant rural landed class extended its influence to the cities, facilitated by democratic politics, and by siphoning off government funds for its own political expansion and economic rise. With the exception of a few scholars studying the regional dimensions of economic liberalization in India (Baru 2004), the consequences of the rise of an agrarian elite and of its investment strategies and business decisions is not much deliberated. One of the few scholars in India to pay attention to this phenomenon, Bagchi, calls this “Haveli capitalism,” “the style of exercise of power by the typical Indian industrialist” who is usually a “landlord-moneylender-trader-politician” (1999a:22). The work of Kalecki on ‘intermediate regimes’ is also relevant here especially as he used the state capitalist approach to explain the role of state intervention in developing countries adopting a mixed economy approach. Believing that the upper middle class and the landlord class are “incapable of taking steps necessary for capitalist transformation” in India, he goes on to argue that they in fact “constitute active barriers to that transformation” (Sinha et al. 2003:43). Even as Indian and other developing economies are increasingly enmeshed in global capital flows and circuits, it is also important to reflect upon the nature of capitalism and how it has evolved in these countries, the role of ethnicity, rural elites and family networks in affecting firm behavior and business decisions, and the evolving social structure whose political dynamics drive economics in quite distinct ways. For dominant elites in rural areas, in the face of a crumbling rural economy, and increasing difficulties in extracting surplus using

94

d. parthasarathy

feudal forms of exploitation, the control of the city, access to wider political power, and administrative mechanisms are important to fund or subsidize new economic activities both in rural areas and in cities. Continuing rural urban linkages owing to political power resting in the hands of rural elites, and a large labor force dominated by informal sector workers with persistent rural roots and dependencies, these impinge on both the spatial manifestations of capital investment and flows, and on the types of labor processes and relations that emerge. Encompassing sectors at different stages of capitalist development, and with different rural-urban demographics, the Indian social formation reflects quite different class fractions and class divides that are key to understanding the specific manifestation of state capitalism and its transformations. It is also imperative to remember that the process of primitive accumulation is as yet an ongoing process in India, and that the logic of accumulation is quite different in an economy where caste determines the division of labor, and hence the expropriation of surplus from labor is much higher. The social context of capitalism in India means that, in actual terms, despite about forty years of protection from international competition, the Indian capitalist class, and the new agrarian-urban capital could (still) not compete when globalization and economic liberalization opened up trade and markets. As Mukherji argues, quite convincingly, the history of economic change from the 1940s to the decade of the 1990s is one of “how powerful social actors who derive benefits from a certain set of policies oppose a change in the social equilibrium” (2009:100). Thus, when the process of economic liberalization was started in the mid- 1980s, by the early 1990s, big business in India was beginning to feel the pinch (Jenkins 2003), and therefore floated the Bombay Club – a loose coalition of some of India’s biggest tycoons who wrote a report asking the government to “create a level playing field” by reducing restrictions on local companies and imposing them on multinational corporations (MNCs) so that they could compete more effectively with foreigners. The club’s members eventually teamed up with the very MNCs they wanted to cut down in size as Indian big bourgeoisie was in dire need of foreign exchange for imports, and hence there was a “temporary acquiescence … for trade and investment liberalization” (Mukherji 2007:131). There was a feeling in the early 1990s that Indian companies would soon sink or get taken over by MNCs. The fear of getting swamped and the inability to face competition from British companies that existed before independence came back to haunt India’s big business in the age of economic

planning and the fate of democracy

95

liberalization and globalization. Calling this “a crypto-political debate” (Ninan 1999:47), one of India’s leading business journalists stated that many issues raised by the Bombay Club reflected the “concerns of the businessmen, not their businesses” (Ibid.). Ninan continues that about 75 families in India during the so-called socialist planning period “dominated business, … controlled the banks and insurance companies, so they had access to capital; they cornered the industrial licences; they paid the politicians, who therefore did their bidding; and they parleyed in various ways their control of the system” (Ibid.:51). Industrialists who stood to lose and who subsequently became junior trading partners of MNCs during the economic reforms, used the rhetoric of “national interests and national pride” (Bajaj 1997) rather than economic arguments, to justify their positions. A form of ‘crony capitalism’ emerged during the period that some have argued is a degenerated form of state capitalism. Much of India’s private sector benefited and grew through largesse from the public sector or government-owned banks, including those which were nationalized. Persistent work by banking unions over the last decade in India have laid to rest the inefficiency argument of public sector banks and have instead exposed the ways in which the loot of public finances and banks has been facilitated by state agencies in aid of inefficient and rentier interests amongst the business elites of India. A large proportion of the shareholding of the private sector in India was, and continues to be, held by public financial institutions that have rarely exercised their rights to take administrative control or improve the functioning of these firms to create value for their shareholders. Even the nationalization of the banks in the 1960s and 1970s was aimed at bringing in liquidity for the corporate sector, in a cash strapped market (Baru 2002). However, as Jenkins (1999) and others have argued, we also need to understand why India’s business classes supported the process of liberalization if they stood to lose from it due to the entry of MNCs with whom they could not compete; therefore, the business classes soon became comprador trading agents or shifted to other business where competition was less. It is here once again that a combined class-caste perspective helps us understand the somewhat reluctant, and later quite vociferous, support for economic liberalization in India by the capitalist class. Stating that the issue of state ‘capture’ has not received adequate attention by scholars, Jenkins argues that “supporting liberalization made sense for large segments of the business community (due to) the prospect of influencing decisions that would determine

96

d. parthasarathy

which groups would bear the costs of the transition” (1999:116); he specifically mentions how this enabled the ruling classes to capture civil society through control of the state in order to undermine movements by the poor. Thus, both in the case of the Bombay Plan of 1944 and the Bombay Club of the post-liberalization period, the important point to note is that “big business was able to calculate that retaining influence over the process of reform was more rational than outright opposition” (Ibid.:117). In the 1940s, communist parties and trade unions had become very powerful in Indian society and politics, and the need to prevent their rise to power was a very important reason for big business to support the Congress and its middle path of planning, even by preempting the Government’s approach to economic management by launching its own version of a plan which was much less radical than socialists and communists would have it. Of course this is not to deny that sections of India’s big business were also able to use their control and influence over the state to get protectionist policies and tariffs in place. State capture, and allowing the myth of an interventionist socialist state to perpetuate, also helped to establish and maintain interventionist state policies and institutions for managing and controlling workers and their unions especially in the formal or organized sector. If one adopts a state capitalism perspective to study the ways in which business groups in India have tried to influence state policy, what emerges is a clear link between the use of state institutions and mechanisms for protectionist purposes, and the use of state apparatus for constraining and repressing class struggles and people’s movements. As I argued earlier, the unwillingness to modernize the labor process has a definite effect on the competitiveness of firms which therefore necessitates protectionist measures in order for these firms to survive or even thrive when markets are opened up. It is not surprising that arguments for a ‘level playing field’ are frequently made together with statements about low productivity and laziness of workers and their frequent tendency to go on strikes. From the other side of the equation, an inability to compete with foreign capital means that the only way in which local firms can stay in business is to ignore modern practices and try to extract as much absolute surplus as possible6.

6 To quote in greater detail from Marx: “The specifically capitalist mode of production ceases in general to be a mere means of producing relative surplus-value as soon

planning and the fate of democracy

97

Or even where extraction of relative surplus is a feature it is based on cutting wages and/or reducing the cost of living, rather than revolutionizing the technical processes of labor, and hence has little impact in terms of revolutionizing the social formation and social relations. In a deeply hierarchical and divided society like India then, traditional features of the social structure and social formation are retained, further constraining the ability of the capitalists to innovate and compromising their managerial and technical capabilities. Ironically, then, it is from a section of the working class and from social movements arising ‘organically’ from among the impoverished classes, that the impetus for progressive economic change emerges. Some of the mainstream communist parties and, more recently, dalit organizations and scholars believe that economic change propelled by forces of globalization will finally destroy the feudal social structure in India, on the ruins of which a new society can be built. As I will show below, the problem with such an approach is that it ignores the role of the state in sustaining capitalism as well as capitalists. It is precisely because of the inherent progressive possibilities of the domination of transnational capital over local capital which is still in a period of transition to full blown capitalism, that local capital favors state capitalism as its most effective tool for survival; and it is for the same reason that big business wants only selective (e.g., the Bombay Club), and “not blanket liberalization” (Patnaik 1995). Planning, then, is not simply for creating infrastructure and funding corporate growth and the personal aggrandizement of big business and business families. It is also a tool for appropriating national and public-owned resources, for excluding the masses from access to such resources as well as from using the state to access themexclusion from development in effect - and for reordering and rearranging social, political and economic institutions and structures in ways that are always advantageous to the ruling elites. In the following pages I provide illustrations of how this happens, of the forked tongue in which elite discourses are spoken – the discourse of liberalization to

as it has conquered an entire branch of production; this tendency is still more powerful when it has conquered all the important branches of production. It then becomes the universal, socially predominant form of the production process. It only continues to act as a special method of producing relative surplus-value in two respects: first, in so far as it seizes upon industries previously only formally subordinate to capital, that is, in so far as it continues to proselytize, and second, in so far as the industries already taken continue to be revolutionized by changes in the methods of production” (Marx 1992:646).

98

d. parthasarathy

deny or take away rights of the working classes and the poor and marginalized, and the discourse of planning when liberalization and globalization threaten the dominance of ruling elites. Putting State Capitalism in Perspective: Economic Liberalization and the Imperative of Planning Through an analysis of policy changes and of elite discourse on development and economic growth, in this section I attempt to show that there is no antinomy involved in the support for both ‘socialistic’ planning and economic liberalization by business elites and proponents of economic liberalization in India. While some perceptive scholars have noted the greater intervention of the state in the age of economic liberalization in India, the nature of this intervention and the widespread support among the capitalist class for planned state interventions, and even an active opposition to the market on some issues is rarely treated with the significance it deserves. While there is undeniably a greater consensus and support for liberal economic reforms and an enhanced role for the market among the middle classes (Sridharan 2004), and among different capitalist and ruling class fractions, the reasons for this, and the purposes for which economic deregulation has been utilized by these fractions is not well understood. In particular, issues such as how the caste status of the middle classes relates to an ambivalent attitude towards economic reforms, as pointed out by Sridharan, need to be taken seriously and requires further research. This becomes necessary as significant scholarly attempts to characterize the Indian urban bourgeoisie usually do not consider the caste of this class. Can we postulate, for instance, that the caste status of sections of the middle class influences them to use the state for purposes of exclusion, and as a strategy for enrichment and status/dominance maintenance? Questions such as these force us to rethink notions regarding the inherently progressive potential of bourgeois nationalism, something the Indian Trotskyite sociologist, A.R. Desai, did consistently (Desai 1966). Law and the State in Promoting Capitalist Growth and Curbing Worker Power In the name of paternalistic policies and protection of workers, the post-colonial Indian state carried forward in an unmodified or slightly

planning and the fate of democracy

99

modified form many of the colonial labor laws, particularly the Trade Unions Act. In addition, new labor laws, such as the Industrial Disputes Act, were enacted in the immediate post independence aftermath. These laws, with active support from the capitalist classes, privileged state intervention, promoted compulsory adjudication and arbitration, made it difficult for labor to organize and launch collective bargaining efforts, and subjected labor to political control. Apart from the colonial origins of these modes of labor control, some of these also had their origins in war time rules promulgated by the British Indian government (Saini 1999). The post-liberalization chorus on ‘rigid’ labor laws preventing economic growth, and the demand for labor laws to be reformed and made more flexible notwithstanding, the fact remains that organized labor in India continues to be a tiny fraction of the total labor force, that this labor force’s activism has been curbed both by labor legislation and by use of force and political subterfuge, and that the vast majority of workers labor in the informal sector in conditions totally unprotected by labor legislation. What explains the current demand for labor law reforms and to make them flexible? How do we comprehend the attempts by India’s judiciary to curtail workers rights in the context of economic reforms? What does the evolution of the debate and discourse on labor relations and labor laws tell us about state capitalism? How important is an understanding of labor processes for analyzing the emergence and persistence of state capitalism in whatever form? India’s Supreme Court and various state High Courts have, in the last few years, curtailed or otherwise severely restricted workers’ rights and ability to go on strike. At the same time, government agencies and corporate firms have frequently refused to negotiate or bargain on issues concerning workers who have then had to suffer huge humiliations and privations by going on strike ‘illegally,’ the only option available. Various courts in India also have struck down earlier judgments guaranteeing a ‘right to livelihood’ as part of the fundamental right to life. The State has more often than not faithfully implemented these judgments or failed to argue against them in courts or even to legislate in order to protect citizens’ rights. In a case involving shifting out of the municipal limits polluting, small scale industries which provided employment to hundreds of thousands of semi-skilled workers and which were then forced to close down, protesting workers were labeled as ‘hooligans’ by India’s Supreme Court which stated that the health (presumably of the middle and upper classes) was more important

100

d. parthasarathy

than the livelihoods (of workers). Similarly, where the Bombay High Court had upheld street vendors’ right to livelihood, now routinely deliver judgments denying them such rights. Likewise, in the case of many public sector undertakings, arguments of profitability have been adduced, even in the case of service agencies, to deny hard won rights such as bonuses, pensions, regular pay rises and so forth. For instance, the right of municipal workers in Mumbai for bonuses was taken away a few years ago (Parthasarathy 2001). In another case, employees of a public sector undertaking have been told by a court that they have no automatic right to pay rises and promotions when their firm is not making profits (Ibid.). Frequently, courts label workers struggling against such whittling down of their rights as hooligans, anti-social elements, thugs, riff-raff, and criminals. Responding to and taking up the causes of an increasingly vocal middle class and urban elite for whom preservation of their consumption levels and lifestyles have always been more important than mere democratic rights, courts have even threatened the use of the army against those sections of the working class who resort to industrial action to protect their rights. Thus, the opening up of the economy and economic liberalization has not been accompanied by a turn towards political liberalism and an expansion of democracy. Political columnists frequently using classic liberal thought to support economic change see little irony in supporting the suppression of democratic rights in the name of efficiency, profitability and economic growth. This has partly come about due to the “separation between politics and development” (Reddy 2002:881) effectively propagated by pro-liberalization regimes. Writing on one of the states in India (Andhra Pradesh) known for its promarket reforms as well as high levels of human rights abuses, Reddy states that the new market-friendly regimes that have come to power in India today “deny (a) conflict resolving role to politics by keeping away the question of distribution outside the ambit of ‘development’ discourse” (Ibid.). Through a spurious kind of participation and governance reforms, development is sought to be depoliticized; those who raise uncomfortable questions of redistribution are branded as Naxalites7, Maoists, communists etc. Politics is seen as a distraction

7 Naxalites or Naxals are popular terms used by the media as well as the state to refer to Maoist communist revolutionary activists and groups.

planning and the fate of democracy

101

from the task of economic development and governance, a stance that is particularly useful since it “sets new terms of governance in which the state abdicates its responsibilities and actively remains as a facilitator of market reforms” (Ibid.). The state then becomes free to promote capitalist growth and also gets the legitimacy to suppress protest movements since maintaining law and order is seen as the legitimate role of the state ever since the market has taken over the task of development, with the state as facilitator. In Andhra Pradesh itself, these developments should be seen in the context of the rise to political and economic dominance of a class that has its roots in agrarian prosperity, a class that consists of dominant castes which own substantial agricultural land, sits at the top of an agrarian hierarchy, and has been ruthless in suppressing lower caste movements against caste oppression, as well as struggles by agricultural labor. The ‘market friendly regime’ is thus also a regime that is closely linked to a semi-feudal, semi-colonial social formation, and contributes to an “endemic process of predatory commercialization” (Bagchi 1999b:83) as seen in the Satyam financial scam. For middle class professionals, for the new techno-class, and for the old and new entrepreneurial business classes as well, human rights abuses and violent suppression of democratic struggles rarely constitute occasions for self-reflection, since the victims are usually the ‘other’ of the dominant upper castes, and hence do not affect the body politic of the rising middle classes and owners of capital, or even the agents of the state, who are also extractors of surplus. The sociologist A.R. Desai is among the few who has raised this dimension of the role of the state, while others have commented on the formidable increase of the power of the Indian state that has “vastly multiplied its police and paramilitary structures of coercion and repression” (Sathyamurthy 1999:43). The field of law constitutes an important arena for control. ‘Reform labor laws’ has been a popular slogan among business groups in the post-liberalization period, and ‘rigid’ and ‘inflexible’ labor laws are often cited as reasons for the slow rate of economic growth and inflow of foreign direct investment into India, in comparison with countries like China. An analysis of the clamor for reforming labor legislation, however, reveals that what business wants is actually reform of laws in their own favor apart from making labor laws flexible to hire and fire, to hire contract labor, to deny the right to strike, etc. Some analysts consider the enactment of labor legislation a contribution to strengthening labor security and labor rights (Reddy 2003). However,

102

d. parthasarathy

it is by no means clear that the large number of labor laws that are in place in India have actually yielded benefits for the working class. On the contrary, studies in the field of industrial relations posit the view that the way in which laws are enacted and the provisions they contain actually work against the interests of workers and usually favor employers. The most obvious example of this is the Industrial Disputes Act of 1948 (referred to earlier) which, despite numerous amendments over the years, still does not provide for collective bargaining (Ramaswamy 1985). The communist affiliated All India Trade Union Congress opposed the Trade Unions Act in the early 1950s for providing compulsory adjudication and arbitration that led to a “worsening of the conditions of the working class,” and “in a state based on capitalist-landlord relations, … (it leads to) an open dictatorship over the working class in the ultimate interest of the exploiting classes” (Ramaswamy 1986:28). Initially, in the years of political independence, the ‘weakness’ of trade unions was given as a reason for denying this right in the short term. Given the successes of the trade union movement in urban and rural India just before and after independence, this is difficult to believe. Industry and business initially opposed compulsory adjudication as an alternative to collective bargaining. However, they soon realized its merits in the context of domination and control over the political class which could be made use of to suppress working class movements using the compulsory adjudication clause. Ramaswamy (1986) offers a graphic account of state manipulation favoring Indian employers in selected industrial disputes. Similarly, business associations and firms in India have been campaigning for easing the rules on hiring and firing. The best way to do this would be to scrap laws relating to labor security. However, industry bodies, apart from not asking for this, have lobbied for amendments in order to make the Acts biased in their favor. Thus, while employers want the freedom to hire and fire, they also want restrictions on declaring ‘lockouts’ – which exist in the present Acts – to be removed. Similarly, both the Industrial Disputes Act (IDA) and the Trade Unions Act, in India, do not provide for a procedure for recognition of unions, nor even for secret ballots to enable arbitrators and employers to deal with a majority union (Bhowmick 1996). Such provisions, or the lack of them, enable employers to effectively float and use strike breaking unions as happened, for instance, in the epochal Bombay textile strike of the mid-1980s that led to large-scale closure of textile mills in the city of Bombay (Ibid.).

planning and the fate of democracy

103

That the motivations behind the demand to make labor laws more flexible are quite dubious is shown by studies that examine the impacts of flexibility on output and employment growth – justifications usually advanced by its advocates. Based on an econometric analysis of the Indian manufacturing sector, Guha, for instance shows that “increasing labor market flexibility – defined as an increase in the proportion of non-permanent/casual workers in total workers – has no positive impact on output and employment growth” (2009:51). Since “Indian labor laws were formulated with the explicit purpose of containing industrial conflict - to make it difficult for (workers) to go on strike” (Kuruvilla and Erickson 2002:174), the real reason behind the demand for flexibility seems to be an inability to face competition in the liberalized era, and hence, in the context of a lack of capacity to innovate, extracting a higher proportion of the surplus by amending labor laws is an easier option. Flexibilization would also enable capital to undermine and discard the limited rights that the Indian working class has been able to achieve – those pertaining to retirement benefits and provident funds, medical care, maternity benefits, child care facilities, and working conditions. As Saini argues, very powerfully and with anguish, labor and industrial legislation in India have worked to create a situation where the “state has been directly or indirectly privatized for the use of some sectors of the political economy and to the exclusion – or partial exclusion – of the other sectors” (1999:L-35). The specific model of dispute resolution and union activity enabled by these laws has “enabled employers to effectively use their political power through the structural contradiction of the IDA framework, as a resource for their own dominance” (Ibid. L-39), to use “it as a legitimator of the practice of authoritarianism, fraud, and even tyranny on workers seeking redefinition of labor relations. It also enabled them to forge alliances for legitimation of structures and processes of power dispensation” (Ibid.). More specifically, ostensibly to facilitate increased exports and higher levels of foreign direct investment, many states in India have set up Export Processing Zones (EPZs) or Special Economic Zones (SEZs) and have identified industry clusters or sectors where many labor laws do not apply. Using provisions meant to prevent blockages to the provision of essential services to citizens, state governments have identified a whole range of industries including, in some cases, the film industry, as a ‘Public Utility’ in which workers have considerably less bargaining power, security, and rights. In states

104

d. parthasarathy

with a political establishment inimical to the interests of workers, even government employees once part of the ‘labor aristocracy’ find their status declining in terms of security, rights, economic status, and political power. Rather than simplify or retract labor laws to facilitate economic liberalization, amending such Acts to favor industry is more beneficial for business. Thus, a key aspect of State Capitalism in India has been to control and exploit the working classes through effectively enacting and amending labor legislation. In recent years, Acts have been amended to make it much more difficult for public and private sector workers to go on strike, while restrictions and permissions for closing down industries have been eased. This is despite the fact, as several studies have shown, lockouts in India have been more numerous than strikes, and employers mismanagement and misappropriation of funds have been among the major reasons for industrial sickness rather than low productivity of workers, strikes, etc. (Noronha 1999). Once again, many of the changes in labor laws, as well as the original legislation, do not even meet the criteria for justice outlined by liberals themselves (such as the equity and difference principles as outlined by John Rawls). A spurious liberalism has come into existence that has its roots in a rentier class that is not innovative, is unable to modernize technologically and managerially, and that can only enrich itself with the help of the state and transnational capital (with which it has a lovehate relationship). This has led to a situation wherein even as the economy is liberalizing, society and the polity are becoming more and more illiberal, leading to denial of basic rights. Another arena in which opposition to liberal social and economic transactions is evident, is the arena of land transactions, the land market in general. Because land is an important means of production, and land enclosure also assists the process of primitive accumulation through expulsion and creation of a labor force, one would assume that the creation of a free land market would be unconditionally supported by capital. The controversy over SEZs, and the response of both state and capital to people’s struggles against SEZs, offer clear evidence that foreign and indigenous capital are clearly unable to use the market mechanism in acquiring land for capital accumulation. What is also clear is that apart from roping in the state as an agent to acquire land on its behalf, capital also supports the SEZs owing to the financial incentives and subsidies that come attached to land acquisition and the relaxation in

planning and the fate of democracy

105

protective labor legislation that have been applied to the SEZs as ‘incentives’ to attract investment by provincial governments in India. It is little wonder then that opposition to SEZs has emerged as a key ‘new social movement’ in India in the past decade, and that the state has responded to these struggles using an excess of violence and brutality. The issue of SEZs particularly, offers support to the central arguments of this chapter, in as much as they combine suppression of workers’ rights with financial and real estate incentives to old and emerging capital, and to foreign and indigenous agrarian capital. ‘Casino capitalism’ derives from the social significance of real estate, the higher profitability of real estate and the ease of organizing and managing labor as opposed to manufacturing. The fluidity of real estate as assets that can be easily liquidated, the ease of using real estate to leverage other more risky businesses – all of these reflect a sociology of state capitalism very different from conventional approaches that offer a more simplistic ‘state as an agent of ruling class’ kind of analysis. Urban Restructuring: The Antinomy of Planning and Liberalization? Despite the neo-liberal and post-modernist onslaught on Marxist theory, one area that has seen very rich contributions from Marxist social scientists has been urban studies. Much of this has outlined, at a global level, the implications of global flows of capital for cities, their built environment, their labor force, the nature of work, and work places. These studies have, however, given an almost overdetermining emphasis to capital, to the relative neglect of other forces. In the Indian context, even as economic liberalization has wrought the most changes in cities, there is a simultaneous attempt by capital and other elites to exercise greater influence and control over urban planning institutions and processes. While the need to improve the efficiency of capital turnover time can be one factor in influencing city planners to improve urban infrastructure, several other forces and factors are also at play. Peasant castes and other rural classes who hitherto did not have access to power in cities and state capitals, have, through democratic processes, gained greater access to, and control over, cities as the seat of power. This power has been used through consolidating their hold over their rural fiefdoms (through selective investments in social and physical infrastructure, and agro-processing industries), with consequences for urbanization in their rural backyards. At the same time,

106

d. parthasarathy

these agrarian politician-capitalists have also invested heavily in real estate and other easy to manage businesses (trading, education, films and entertainment) in cities. This partly explains the sociology and politics of real estate that characterizes many Indian cities currently. Cities like Hyderabad in southern India, which have seen a boom in real estate development and construction as a consequence of becoming an important node in global software outsourcing, have also witnessed several real estate scams involving politicians and agrarian capitalists, and struggles by those evicted from land in and around the city. The recent spectacular implosion of Satyam – one of India’s biggest software firms – attests to the weakness of a capitalism managed by rural elites, and also points to the links between the ‘new’ economy, the politics of real estate, rural-urban networks, and the role of the state in facilitating the growth of businesses which depend crucially on state support in the form of land acquisition, incentives, subsidies, and contracts. In this context it is interesting to note here that, by adopting a traditional ‘terms of trade’ kind of argument, scholars of development planning and the state have tended to focus on “antagonisms of interests between town and country” (Byres 1994:37) rather than ruralurban connections. The role of the state, and of its institutions (located in cities) for regional capitalist classes cannot be overemphasized. Despite the richness of Baru’s (2004) analysis of the regional inequality dimension of the rise of regional capitalist classes, a specifically urban focus alerts us to other aspects of this process which are missing in his analysis. In the case of the state of Andhra Pradesh that Baru studies, while his interpretation of the urbanization and economic prosperity of the coastal Andhra region vis a vis the relative backwardness of the Telengana region is largely accurate, one must also ask why the Andhra elite chose to develop the city of Hyderabad located in the Telengana region rather than cities in their own backyard. The answer lies in the dire dependence of the regional agrarian elites on state institutions located in the capital city of Hyderabad, for their survival and economic rise. Similar processes have been at work with respect to agrarian elites from the western Maharashtra region using the capital city of Mumbai for their economic survival, status maintenance, and political dominance. While Baru does bring in the use of caste and kin networks in the rise of agrarian/regional capitalists, the larger implications of a caste based state capitalism are not outlined. This kind of analysis of urbanrural, industrial-agrarian networking and capital flows undermines

planning and the fate of democracy

107

the innovative “passive revolution”8 kind of analyses of the role of the state in India such as those by Chatterjee who, as paraphrased by Byres, argues that this “failed to produce a full scale assault on the institutional structures of the colonial state” (Byres 1998:43), and that the state “failed to attempt an attack on pre-capitalist dominant classes.” Chatterjee’s interpretation partly rests on an uncritical acceptance of the state’s role in promoting capitalist transformation, but also co-exists uneasily with an idea of development planning as some kind of an independent, autonomous exercise. The politician-trader-bureaucrat-landlord-industrialist nexus in India clearly indicates that economic transformation of post-independent India had a clear agenda as far as state intervention was concerned. Moreover, firms like Satyam, or the Nagarjuna group obliterate any distinction between capitalist and pre-capitalist classes, and economic historians of modern India have shown that in fact most big business houses in India have their origins in feudal exploitation especially through usury. Support for exclusivist urban planning policies and initiatives has also come from the professional middle classes – mostly belonging to the upper castes – who are threatened by the democratizing potential of cities, especially in the context of an upsurge of lower caste political mobilization, and the large scale migration of the rural underclass to cities – who use global cultural and consumer flows in ways that undermine traditional, status-based conservative social structures. Planned exclusion and state supported sanitization measures in cities are thus not externalities of the imperative of quickening capital turnover time, but are reactionary responses to the progressive potential of capitalism in a society where ascription still largely determines destiny. Any debate on state capitalism has to factor in the new urban planning imperatives that are related to capital influenced spatial planning, but also need to pay specific attention to the nature of indigenous capital and its investment needs, and a burgeoning upper caste middle class concentrated in cities that seeks to maintain its hegemonic position in society. In other words, we need to avoid the tendency to explain everything that goes on in cities as a reflection of neo-liberal

8 The passive revolution for Chatterjee is “a molecular transformation of the old dominant classes into partners in a new historical bloc and only a partial appropriation of the popular masses, in order first to create a state as the necessary precondition for the establishment of capitalism as the dominant mode of production” (cited in Byres 1998:38).

108

d. parthasarathy

interventions, as an outcome of capital flows; capitalist and non-capitalist elites (including power elites) use neo-liberalism and capitalism, as well as other political systems and ideologies to achieve power objectives, and regional elites have been especially effective in this, in India. As specified in the earlier section, the huge controversies generated by SEZs (Special Economic Zones) over the past few years exemplify the crucial role of the state for India’s capitalist class. The anti-SEZ movement has been an important part of the anti-globalization movement, even as provincial states and the federal government vie with each other to promote SEZs as a model of economic growth. There are several strands in the push towards SEZs that epitomize state capitalism as it has evolved in India. First is the land acquisition itself for these zones that have drawn massive protests from communities uprooted from their livelihoods and living spaces to make away for the SEZs. Why does the state intervene to acquire land on behalf of private interests? After the current round of protests, when the state decided to temporarily suspend SEZs until a satisfactory compensation and land acquisition policy is worked out, it is worth noting that neither the proponents of economic reforms nor the state itself has advocated using the market mechanism to compensate for land acquired. Since protests have mainly centered on the nature and quantum of compensation, the failure to push for market mechanisms and the push to strengthen the state’s power to acquire land for a private purpose is all the more intriguing. The real issue seems to be that capital is loath to compensate loss of assets (land) and livelihoods at market rates; land acquisition by the state works out to be much easier in terms of transaction costs, and cheaper since the land as seen in several instances is sold at a fraction of its market price. Even where the law permits direct acquisition of farm and other land from its owners, developers of SEZs prefer to take the non-market route and acquire land through the state. The second reason why state intervention is preferred by capital in setting up SEZs and for other industry, mining, and infrastructure projects, is that the state usually offers soft loans at extremely attractive interest rates as part of a package deal along with land acquisition as seen in the recent case of the Tata Nano automobile project. The third ‘state capitalism’ aspect of SEZs that is unmistakably evident is the considerable relaxation in labor laws that are offered in these zones. The SEZs thus represent a comprehensive approach by sections of Indian capital to remain competitive in the context of increasing

planning and the fate of democracy

109

external competition – something that is quite difficult for them given their past oligopolistic behavior and the preferential support they have received from the state for several decades. Thus, as Tyabji notes, “Indian industry … continued to draw a distinction between a desirable internal process of deregulation and an undesirable pace if not the very direction of an external deregulation” (1999:310). Apart from these reasons, SEZs are also an important source of income for the rentier class - politicians, the bureaucracy, and the rural landed classes. All of the above point to a situation wherein even as there is widespread elite consensus and support for economic reforms and liberalization, state intervention of specific kinds is on the rise. Planning receives a new lease of life, markets are bypassed in favor of a preferred role for the state, even as, ironically, the retrenched working classes relics of the decline of manufacturing, find it difficult to get absorbed in the new jobs that are opening up. Urban elites despite a profession of great conviction in liberalization, have faith neither in the dynamism of this underclass (which includes hawkers, street vendors, roadside entrepreneurs, and traders and manufacturers involved in numerous activities to cater to the needs of the poor and the lower middle class in cities), nor in their abilities to work out solutions to complex urban problems. This is evident from the many studies (especially in Mumbai and Bengaluru) documenting the emergence of a new type of middle class activism promoting ‘good governance’ approaches that exclude the majority of urban citizens, and that ignores key economic and developmental issues in favor of narrow definitions of ‘transparency’ and ‘accountability.’ Sectors like software and information technology, while contributing very little to Indian output and exports, exercise disproportionate influence over public policy (Saxenian 2002) which mirrors the attempts by this sector and of professionals working in this sector to exercise undue influence on urban planning by putting pressures on the state to intervene in favor of their agendas. It can be thus argued that social exclusion and assaults on the poor and marginalized in Indian cities represent a continuation with earlier policies and models of ‘democratic planning’ which largely benefited the propertied groups even as they systematically eroded the rights of citizens. In many Indian cities, competing mobilizations are occurring over the reconfiguration of pre-dominant urban spatial arrangements and it is in such mobilizations that one can discern contradictory

110

d. parthasarathy

impulses between the needs of economic liberalization, and the push towards a planned city originating primarily from elite images and requirements/desires. Despite the rhetoric and elite consensus on economic liberalization, India’s ruling classes continue to feel that their minimum infrastructural needs could not be left purely at the mercy of the market forces and hence demand state intervention. The state, in pre-colonial, colonial, and post-colonial periods, though playing a dominant role in alliance with elite groups in urban planning and renewal, never completely achieved control and supremacy over civil society. Perhaps because of the strengths intrinsic to caste and ethnicity based social structures, these continued to interact with emerging forms of economic activities in Indian cities (Parthasarathy 1997) to evolve unique constellations of urban space and culture. Since the emergence of industrialization however, one constant feature seems to be the struggle of working classes and the urban poor for expansion of citizenship rights, a phenomenon that has not been studied to the extent urban-based nationalist struggles have been focused upon. An important study of colonial nineteenth century Bombay states: More fundamentally, the local state’s authoritarianism and general unwillingness to support the validation of expanded citizenship rights, was a function of its own class location in urban society. Traditionally, it had made use of its unique resources of power, wealth, and prestige to structure the dominance of capital over civil society. Integral to this hegemony was a system of unscrutinized accommodations between the colonial regime and the dominant class factions, largely at the expense of the majority of urban citizens. This process had shaped a characteristically archaic and regressive capitalism, hostile to the development of civic rights, and thus posing a formidable obstacle to sustainable urban renewal. In this era, however, the escalating demands for a range of democratizing rights began to articulate challenges that could not ultimately be met within the limitations of the colonial model of citizenship. (Hazareesingh 2000:798)

More than a hundred years later things do not seem to have changed much. Paraphrasing the last sentence, we could perhaps state that the escalating demands for a range of democratizing rights are beginning to articulate challenges that cannot ultimately be met within the limitations of the neo-liberal model of citizenship that pervades elite discourses of urban planning and renewal in Indian cities today. It is a model that disturbingly parallels parochial and ethnic/chauvinist standpoints in its exclusionary tendencies. Restructuring of land use patterns as well as the upgrading of infrastructure in metropolitan

planning and the fate of democracy

111

cities in India have led to significant impacts on the urban poor in terms of forced evictions and demolitions of ‘illegal’ structures, used for housing and for hawking and vending. At another level, a more nuanced analysis of urban discourses and of the actors behind them reveals a tenuous but definite linkage to specific kinds of urban change fostered by liberalization, decline in municipal finances, and the specific kind of bourgeoisie that are coming to occupy center space in Indian cities, a bourgeoisie that is rooted in the service and trading sector and is geared towards meeting the garish and conspicuous consumption that characterizes urban middle class and elite households today. Thus the importance of guaranteeing security and comfort in consumption, which requires not only ease in such things as commuting, and increased space for living and consuming, but also an easing of guilt, which necessitates the removal, by amputation, of sections which constitute an eye sore, that constantly remind us of the lives that we lead, and of our responsibilities. Demolitions, removal, and relocation of slums and of street vendors are a prime example of this. Perhaps, the emerging public discourse about civic and urban problems derives from the kind of legitimation crisis that Habermas wrote about, wherein the pressures of a free market economy, as well as, in the Indian context, the imperatives of preventing a law and order breakdown, and ensuring infrastructure development, require state intervention. Resolving the normative contradiction in such interventions requires the production of an ideology and accompanying discourses which is what some of the fronts for business groups and NGOs are producing. Specifically, the discourse involves a privatistic retreat from a citizen’s role, a selective use of citizenship from the point of view of client interests (Habermas 1997:78). From this point of view, what proves insightful is to look from a different angle, one from which we see a turn toward state capitalism – the capture of the state for private interests – but private not quite in a capitalist sense, since these private interests do not necessarily serve the interests of capital accumulation, but the interests of a specific caste-class. The ex-untouchable community in India – the dalits – have argued that the city in India is a space of anonymity that gives them freedom from social oppression and stigma; the city offers opportunities even if they are barely sufficient for survival. However, the new planning mantra that is accompanying the process of economic liberalization is perhaps setting up a new caste system in the cities in terms of consumption

112

d. parthasarathy

patterns, lifestyles, access and exclusivity to urban resources and spaces. But what the new movements, led in part by a new aggressive type of NGO representing middle class and business interests, are doing, is also to simply clear the city of certain spaces and thereby the people living in them. The industrial city as a progressive force is thus ironically losing its progressive nature just when liberalization promised to rid society of its old structural equations on the basis of caste, ethnicity, and gender; and even as many laws pertaining to the use of urban resources (ostensibly enacted to protect the interests of the poor) are being repealed, the ghosts of planning are being revived by the liberalizers to monopolize public space and deny life and livelihood opportunities to the poor. There is a parallel here with state capture, not for capital accumulation, but for maintaining caste, ethnic, feudal dominance and using this dominance to extract rent and sustain feudal forms of exploitation. The debates on development planning in India took place mostly in the 1970s and 1980s and therefore they missed out on important later political developments that negate arguments to the effect that “the state legitimizes the modern sector itself as representative of the nation as a whole” (Chatterjee 1998:69). Political shifts since the mid-1980s clearly indicate that, along with economic reforms and liberalization, there has also occurred a peasant upsurge, with middle castes capturing state power and using that power for political mobilization and empowerment, for suppressing those below them in the caste hierarchy and for redrawing the role of the state in economic development, and in the process sometimes even contradicting and conflicting with the roles that are demanded by domestic and international industrial capital.

State Capitalism and the Future of Democracy in India: Some Conclusions The historian Bipan Chandra has argued that the main function of the bourgeois democratic revolution is to settle the question of state power and to open the way to the capitalist development of society so that “feudalism or imperialism no longer determines the main direction of its political and economic life” (1974:310). As this chapter and as many others, notably Bagchi, Chattopadhyay and other Marxist scholars in India have noted, the bourgeois democratic revolution in India, though successful in securing political independence never really led to real

planning and the fate of democracy

113

capitalist development, since imperialist and feudal forces continued to exercise domination even after decolonization and a democratic transformation. However, because of its strong support for the nationalist movement, the capitalist class in India, after independence, continued to have influence over the political leadership and thereby the state. Over time, competing influences from rich peasantry over the state and state apparatus somewhat diluted business and industrial influence on the functioning of the state. With hindsight, one can say that the mainstream left position in India positing the necessity of state capitalism as an anti-imperial economic strategy and for the development of productive forces (e.g., Patnaik 1995) proved to be naïve, with neither a reduction in imperial power and domination nor the development of productive forces actually taking place. Capital is still largely owned by feudal classes who allied with state capital and a rentier bureaucratic class in the pre liberalization phase, and increasingly with international capital in the post-liberalization phase to subvert the progressive potential of capitalism in freeing labor and unshackling the productive forces. In understanding economic shifts and transformations in India one must comprehend that there has been “an enduring effect on India’s economic development” of “the fact that the bourgeoisie was relatively weak and had to compromise with rural interests” (Mohan Rao 1999:256). This means that in effect it becomes quite difficult to accept propositions such as those by Byres which contend that the Indian “state (was) intent upon dissolving economic backwardness via capitalism” (Byres 1994:11). There is a tendency among many scholars to too easily assume the capitalist mission of the state. The power of the agrarian elites in using the state to extract surplus, and the push towards SEZs are both evidence that the state never really had a clear intent to dissolve economic backwardness. Drawing from approaches current from the time of Karl Marx, this chapter further develops an approach to better understand the specific form of social organization in India which provides the base for surplus extraction and capital accumulation. I argue that India’s unique caste-based hierarchical system reflected in the form of kinship-based ‘family owned businesses’ has significantly influenced the particular form of state capitalism that has evolved. In stating this, I am not simply recognizing with Bagchi “the continued obstruction of capitalist growth by the prevalence of landlordism” (1999b:427). It is also critical that we appreciate and realize that landlords are restructuring capitalism in their own way, and in doing so are influencing the nature of

114

d. parthasarathy

capital flows as well as planning interventions. Interpreting the views of the Marxist historian Kosambi, Wilson mentions that “elements from earlier modes of production … can be transformed and appropriated to meet the needs of the present day Indian state,” and that analysis of these elements helps us “to clarify questions related to … the articulation of caste and class” (1994:270). Consequently, specific forms of competition and market regulation have emerged in the post 1990s period wherein, irrespective of the success or failure of regulatory regimes in different economic sectors, and irrespective of the domestic or global compulsions under which such regimes have evolved, it becomes evident that firms are unable to function without some significant form of state support and intervention (Bidwai 2009). This chapter avoids the analytical pitfalls of standard approaches which differentiate between planning/regulation and liberalization/deregulation as distinct phases in India’s economic transformation. Instead it stresses the continuities across different regulatory phases which indisputably reveal the inability of Indian capital to extract surplus and accumulate purely through market mechanisms, but is forced to rely on the state (through specific models of governance) to make this possible. A recent article by Mukherji (2004) on regulation in the telecommunications sector in India demonstrates that the real issues are not of regulation, divestment or privatization; rather, in every phase of policy shift, and changes in economic strategy, what stands out is the role of the state, the specific nature of state-capital relations in each period, the nature of state intervention, and the role of diverse other groups whose power influences ebb and flow with time. Regional politics provides another dimension to the analysis of state capitalism in India. The political rise of regional elites as well as the movements for statehood within smaller regions in existing provincial states in India point to the emergence of new middle and entrepreneurial classes, for whom state control is crucial to compete with entrenched capital as well as foreign capital. Against these analytical strands, and despite the clear evidence of capitalists using state control and state intervention to promote their interests, a few scholars and some of the left parties in India tend to valorize the role of the state in defending society from a neo-liberal onslaught (Chandoke 1992; Harriss 2000). This is especially true of those who critique the currently fashionable governance agenda promoted by neo-liberal interests including the World Bank and other international financial institutions and aid agencies. On the other

planning and the fate of democracy

115

hand, spokespersons for socially marginalized groups of dalits welcome processes of economic liberalization as a liberating force, and the state as a representative of upper caste regressive interests. In this chapter I suggest that there are problems with both approaches in as much as business elites in India still actively seek and get state intervention to protect their interests and therefore the state is very much a class state. Puncturing the rosy image of free markets often featured in media reports, Bagchi states that “semi-feudal relations blocked the working of free markets in land, labor, credit and commodities and arbitrageurs and speculators prevented the predictability of the ‘administered’ man” (1999c:427). As well, since processes of liberalization take place conjointly with forces of globalization, with Indian businesses as junior partners, and labor processes are yet to be modernized, it is doubtful if the process can be progressive even in a capitalist way. India needs a second democratic revolution either led by a progressive capitalist class which is still incipient, or by transformational forces which are presently marginal to the political mainstream in India in terms of their support base, and their ability to influence the political system. References Bagchi, A.K. 1982. The Political Economy of Underdevelopment. Cambridge: Cambridge University Press. —— . 1989. State Intervention and Industrialization. Text of Lal Bahadur Shastri Memorial lecture, Institute of Public Enterprise, Hyderabad. —— . ed. 1999a. “Indian Economic Organization in a Comparative Perspective.” Pp. 19–62 in A.K.Bagchi ed. Economy and Organization: Indian Institutions under the Neoliberal Regime. New Delhi: Sage. —— . 1999b. “Dialectics of Indian Planning: From Compromise to Democratic Decentralization and Threat of Disarray.” In TV Sathyamurthy, ed. Industry and Agriculture in India Since Independence. Delhi: Oxford University Press —— . 1999c. “Public Sector Industry and the Political Economy of Indian Development.” Pp. 391–432 in T.J.Byres ed., The state, development planning and liberalization in India. Delhi: Oxford India Paperbacks, Oxford University Press and SOAS Studies on South Asia. Bajaj, Rahul. 1997. “Creating Indian MNCs: India must take its rightful place among the economic powers of the world.” Frontline 14, 16. —— . 1999. “A country of 900 million people is not going to be pushed around.” The Rediff Business Interview/Rahul Bajaj. February 2. Article available on www.rediff. com/business/1999/feb/02bajaj1.htm+bajaj+”why+should+I+be+called”&cd= 1&hl=en&ct=clnk&gl=in Baru, Sanjaya. 1988. “State and Industrialization in a Post-Colonial Capitalist Economy: The Experience of India.” Economic and Political Weekly 23(4): 143–145 & 147–150. —— . 2002. “Good Corporate Governance Can Prevent ‘State Capitalism’ Degenerating Into ‘Crony Capitalism.’ ” Financial Express 6 December.

116

d. parthasarathy

—— . 2004. “Enterprise and Development in India - An Interregional Perspective.” India Review 3(4): 385–404. Bhaduri, Amit. 1999. On the Border of Economic Theory and History. New Delhi: Oxford University Press. Bhowmick, S.K. 1996. “State Intervention and the Working Class Movement.” Economic and Political Weekly 31(52): L39–L43. Byres, Terry J. ed. 1994. The State and Development Planning in India. Delhi: Oxford University Press. —— . ed. 1999a. The Indian Economy: Major Debates Since Independence. Delhi: Oxford University Press. —— . 1999b. The State, Development Planning and Liberalisation in India. Delhi: Oxford India Paperbacks, Oxford University Press and SOAS Studies on South Asia. Chandoke, Neera 1991. “Expanding the Marxian Notion of the Post Colonial State.” Social Scientist 19(10–11): 63–89. Chandra, Bipan. 1974. “The Indian Capitalist Class and Imperialism Before 1947.” Journal of Contemporary Asia 5(3): 309–326. Chandrasekhar, C.P. 1988. “Review Essay: State Intervention and Industrial Change: Towards a Synthesis.” Social Scientist 16(5): 61–71. —— . 1999. “Firms, Markets and the State: An Analysis of Indian Oligopoly.” Pp. 230–264 in A.K.Bagchi ed. Economy and Organization: Indian Institutions under the Neoliberal Regime. New Delhi: Sage. Chatterjee, Partha. 1998. “Development Planning and the Indian State.” Pp. 82–103 in T J Byres ed., The State, Development Planning and Liberalisation in India. Delhi: Oxford University Press. Corbridge, Stuart and John Harriss eds. 2000. Reinventing India: Liberalization, Hindu Nationalism and Popular Democracy. Cambridge: Polity Press. Desai, A.R. 1966. Social Background of Indian Nationalism. Bombay: Popular Prakashan. —— . 1986. Violation of Democratic Rights in India, Vol. I. Bombay: Popular Prakashan. —— . 1990. Repression and Resistance in India: Violation of Democratic Rights of the Working Class, Rural Poor, Adivasis and Dalits. Bombay: Popular Prakashan. Guha, Ashok. 2009. “Labor Market Flexibility: An Empirical Inquiry into Neoliberal Propositions.” Economic and Political Weekly 44(19): 45–52. Habermas, Jurgen. 1997. Between Facts and Norms: Contribution to a Discourse Theory of Law and Democracy. Translated by Rehg William. Cambridge: Polity Press. Harriss, John. 2002. Depoliticizing Development: the World Bank and Social Capital. London: Anthem Press. Hasan, Rumy. 2008. “Reflections on the Impact upon China’s Polity from the Retreat of State Capitalism.” Critical Sociology 34(4): 575–597. Hazareesingh, Sandip. 2000. “The Quest for Urban Citizenship: Civic Rights, Public Opinion, and Colonial Resistance in Early Twentieth-Century Bombay.” Modern Asian Studies 34 (4): 797–829. Jayal, Neerja Gopal and Sudha Pai, eds. 2001. Democratic Governance in India: Challenges of Poverty, Development and Identity. New Delhi: Sage Publications. Jenkins, Rob. 1999. Democratic Politics and Economic Reform in India. Cambridge: Cambridge University Press. —— . 2003. “The Ideologically Embedded Market: Political Legitimation and Economic Reform in India.” In Mark Bevir and Frank Trentmann eds., Markets in Context. Cambridge: Cambridge University Press. —— . 2004. “Introduction.” India Review 3(4): 257–268. Kalecki, Michael. 1972. Selected Essays on the Socialist and the Mixed Economy. Cambridge: Cambridge University Press.

planning and the fate of democracy

117

Katzenstein, Lawrence C. 2008. “Review Essay: State Capitalism as a Response to Global Challenges: Market Sense and the New Economics of the State.” Critical Sociology 34: 599–606. Kaviraj, Sudipta. 2005. “On the enchantment of the state: Indian thought on the role of the state in the narrative of modernity.” European Journal of Sociology 46(2): 263–296. Kuruvilla, Sarosh and Christopher L. Erickson. 2002. “Change and Transformation in Asian Industrial Relations.” Industrial Relations 41(2): 171–228. Marx, Karl. 1992. Capital: Volume 1, A Critique of Political Economy. Translated by Ben Fowkes. London: Penguin Classics Mohan Rao, J. 1994. “Agricultural Development Under State Planning.” Pp. 220–264 in T.J.Byres ed., The State and Development Planning in India. Delhi: Oxford University Press. Morris, D. 1987. “Indian Industry and Business in the Age of Laissez-Faire.” Pp. 123– 156 in Dwijendra Tripathi ed., State and Business in India: a Historical Perspective. New Delhi: Manohar Publications. Mukherjee, Aditya. 2002. Imperialism, Nationalism and the Making of the Indian Capitalist Class: 1920 – 1947. New Delhi: Sage Publications. Mukherji, Rahul. 2004. “Managing Competition: Politics and the Building of Independent Regulatory Institutions.” India Review 3(4): 278–305. —— . 2007. “Introduction: The State and Private Initiative in India.” Pp. 1–24 in Rahul Mukherji ed., India’s Economic Transition: The Politics of Reforms, in India’s Economic Transition. New Delhi: Oxford University Press. —— . 2009. “The State, Economic Growth, and Development in India.” India Review 8(1): 81–106. Ninan, T.N. 1999. “Chequered past, uncertain future.” Seminar 492: 46–51. Noronha, Ernesto and R. N. Sharma. 1999. “Displaced Workers and Withering of Welfare State.” Economic and Political Weekly 34(23): 1454–1460. Parthasarathy, D. 1997. Collective Violence in a Provincial City. Delhi: Oxford University Press. —— . 2001. “Judge as Administrator.” Economic and Political Weekly January 20, pp. 247–248. —— . “Urban Transformation, Civic Exclusion and Elite Discourse.” City: A Quarterly on Urban Issues 4. Patnaik, Prabhat. 1995. Whatever Happened to Imperialism and Other Essays. New Delhi: Tulika, Prasad, Pradhan H. 1989. Lopsided Growth: Political Economy of Indian Development. Delhi: Oxford University Press. Ramaswamy, E.A. 1985. “Trade Unions, Rule Making and Industrial Relations.” Economic and Political Weekly 20(12): 517–526. —— . 1986. Power and Justice. Delhi: Oxford University Press. —— . 1988. Worker Consciousness and Trade Union Response. Delhi: Oxford University Press. Reddy, D. Narasimha. 2003. “Economic Globalization, Past and Present: The Challenges to Labor.” In K. S. Jomo, and Khoo Khay Jin eds., Globalization and Its Discontents, Revisited. New Delhi: Tulika. Reddy, G. Krishna. 2002. “New Populism and Liberalization: Regime Shift under Chandrababu Naidu in AP.” Economic and Political Weekly 37(9): 871–883. Saini, Debi S. 1999. “Labor Legislation and Social Justice: Rhetoric and Reality.” Economic and Political Weekly 34(39): L-32–L-40. —— . 2007. “Declining Labor Power and Challenges Before Trade Unions: Some Lessons from a Case Study on Private Sector Unionism.” Indian Journal of Industrial Relations April. Sinha, B. R., R. C. Sharma, and S. R. Sharma eds. 2003. Encyclopaedia of Professional Education: Vol. 7, Industrial Education. New Delhi: Sarup.

118

d. parthasarathy

Sathyamurthy, T.V. ed. 1999. Industry and Agriculture in India Since Independence. Delhi: Oxford University Press. Saxenian, AnnaLee. 2002. “Bangalore: Silicon Valley of Asia?” Pp. 169–193 in A. Krueger, ed., Economic Policy Reforms and the Indian Economy. Chicago: University of Chicago Press. Sridharan, E. 2004. “The Growth and Sectoral Composition of India’s Middle Class: Its Impact on the Politics of Economic Liberalization.” India Review 3(4): 405–428. Thakurdas. Purshotamdas, J. R. D. Tata, G. D. Birla, Ardeshir Dalal, Shri Ram, Kasturbhai Lalbhai, A. D. Shroff, and John Mathai. Bombay Plan: A Plan of Economic Development of India. Bombay. Tyabji, Nasir. 1999. “A Bombay cum Kamaraj plan for the 21st century.” Seminar 482: 37–41. —— . 2000. Industrialization and Innovation: the Indian Experience. Sage Publications: New Delhi. Wadia, A. and K.T. Merchant. 1945. The Bombay Plan: a Criticism. Bombay: Popular Book Depot. Wilson, Kalpana. 1994. “Class alliances and the nature of hegemony: the postindependence Indian state in Marxist writing.” Pp. 246–273 in T. V. Sathyamurthy ed. State and nation in the context of social change:Vol.1, Social change and political discourse in India. Delhi: Oxford University Press.

CHAPTER SIX

WHAT HAPPENED TO CHINESE COMMUNISM: THE TRANSITION FROM STATE FEUDALISM TO STATE CAPITALISM Satya Gabriel, Stephen A. Resnick, and Richard D. Wolff Introduction For much of the early history of the People’s Republic of China, the economics and politics of that nation moved through successive ‘revolutionary’ changes in institutional structures and social relationships. Western analysts often described China as either ‘communist’ or ‘socialist.’ This latter term was popular within China itself, given that this was the official appellation used by the Communist Party of China (CPC) to describe the Chinese society they argued was ‘in transition to communism.’ The key premise used to support the term socialism was that the CPC was the embodiment of ‘worker-peasant’ political authority over the underlying economy. Socialism reflected a presumed political power arrangement and a presumed direction of economic transition orchestrated by that authority. In this chapter we challenge these presumptions. The chapter deploys a post-structuralist version of Marxian theory, grounded in the definition of class process/structure as a particular way in which surplus labor is performed, appropriated, and distributed, to argue that the form of society that existed prior to Mao’s death was state feudalist and the type of society that has emerged since Mao’s death is state capitalist. We also argue that Chinese society appears to be moving in the direction of the prevalence of a corporate capitalism that can easily vacillate between state and private ownership. Chinese State Feudalism The victory of the CPC and its People’s Liberation Army (PLA) over the forces of the Nationalist Party in 1949, enabled greater political than economic changes. Upon taking political power, the CPC

120 satya gabriel, stephen a. resnick, and richard d. wolff inherited an economy that included both private and state capitalism in industry as well as private feudalism in the countryside.1 The Nationalist Party and government had long operated a vast network of state capitalist enterprises that replicated many aspects of Soviet state capitalism (the Nationalists also maintained close ties with the USSR). However, it is significant to note that the Nationalists were not just following the Soviet model. State-run enterprises (SREs) have been part of the political landscape in China since at least the rule of Wu Huangdi, from 141–87 B.C.E. It was during this part of the Han Dynasty that many features associated with socialism were implemented, including land reform, price controls, and public policies to guarantee relatively egalitarian access to critical household goods, such as sugar, silk, and basic metals. In addition, the Nationalists diverged from the USSR in allowing a considerable private industrial sector in which leaders of the Nationalist party and their families were prominent as private capitalists. The Nationalists also differed from the USSR in allowing private feudal class structures to continue to flourish in the Chinese countryside. Once in power, the CPC nationalized the many industrial enterprises that had been controlled by Nationalist Party leaders or their families. Thus, part of Chinese private capitalism was converted to state capitalism with compensation paid to former owners. In some cases, former owners continued to be involved with the nationalized businesses, trading their position as owner-appropriators for the more 1 The post-structuralist Marxian approach allows for many variant forms of feudalism (as well as the appearance of feudal exploitation in a wide range of social spaces), united by a common fundamental class process. The feudal fundamental class process involves first the receipt of surplus labor (or the fruits thereof) by a feudal appropriator or appropriators from feudal direct producers on the basis of an implicit or explicit contract that precludes the participation of the latter in the underlying production process without granting the former the rights to said surplus. The political, cultural, and related economic conditions shaping the existence and reproduction of this feudal bondage contract are many and provide for the existence and reproduction of distinct variants of feudal social arrangements and social formations. Fraad, Resnick, and Wolff (1994) have explored social arrangements by which some households have been constituted, in part, by feudal exploitation, with the marriage contract serving as feudal bondage contract. Serap A. Kayatekin (1990, 1996, 2001, and 2004) has explored sharecropping in the postbellum southern states of the United States of America as conditioning the existence of distinct variants of feudal class relationships, with state laws, credit systems, and racism playing determining roles in shaping distinct forms of feudal bondage. The history of Europe, Japan, and China provide a rich array of private, state, and church feudal arrangements united by this common form of exploitation, as discussed in Gabriel (2006:13–17).

what happened to chinese communism

121

limited role of senior managers, serving as subsumed class agents of the state. At the same time, the CPC abolished the private feudal class structures in agriculture. In their place, official policy re-established the ancient class structure there, i.e., individual private plots. In the late 1950s, the CPC organized dramatic transformations both in industry and agriculture. In the latter, ancientism (individual selfemployment) disappeared in the creation of what were then called ‘communes’ but which we will show to have been a kind of state feudalism. While some families were allowed to cultivate small plots of land, this was not a continuation of ancient agriculture, but a supplementary means of subsistence. The few relatively small private plots decreased the amount of necessary labor that had to be provided in kind to individual households from the collective labor appropriated by the feudal bureaucracy. In industry, the CPC established a new kind of SRE to replace both private and state capitalism.2 We will show that these SREs also were state feudal class structures. The CPC made these transformations to capture more surpluses needed for capital accumulation, military expansion, and the goal of national self-sufficiency. China’s relationship with the USSR had become severely strained by then and the USA was deemed a major threat. Like the Soviet Council of Ministers, COM, the State Council was the specific body within the Chinese state that occupied the class position of receiver of the surpluses produced and delivered to it by both rural workers in the communes and urban workers in the SREs. Unlike the Soviet case, from 1958 until the reform era, workers in China were not “free” in the sense of connecting to their employers by means of impersonal wage contracts. Instead, they were bound to their work sites by a complex of legal, political, and ideological structures and obligations. As explained below, their direct personal subordination to

2 While many may be familiar with the term ‘SOE’ to denote state-owned enterprises in China, we prefer the designation of ‘SRE’ in this instance. SOE refers to a property relationship in which the state is owner but the firm is not a component element in the state bureaucracy, with firm directors and management serving as bureaucrats within that bureaucracy. An enterprise that is state-run, however, is a component part of the state bureaucracy and its directors and management are bureaucrats within that bureaucratic structure. A state-run enterprise is not necessarily state-owned and vice versa. There are many Chinese and non-Chinese examples of this disconnection between ownership and control. For instance, in the U.S.A., United Airlines was for a time an employee-owned enterprise. However, during this period the firm was not employee-run. Employees did not appoint the board of directors or senior management of the firm.

122 satya gabriel, stephen a. resnick, and richard d. wolff the State Council as workers constrained to produce and deliver surpluses to it, renders the class structures of the communes and SREs state feudal, rather than state capitalist. Starting in 1958, the CPC established this bondage of direct producers by means of the hukou and danwei systems (detailed in Gabriel 2006). The former created a legal barrier to movement within the society, for direct producers, similar to the South African passbook system during apartheid (Alexander and Chan 2004). The hukou system denied freedom of movement for rural producers such that “the strict residential registration system coupled with a strict rationing system in an environment of scarcity made it impossible for peasants to make a living in areas other than their own registered residential area” (Chen 1999:107). Rural producers were effectively bound to state lands resulting in an exploitative feudal class relationship whereby “peasants were forced to sacrifice their own interests to support industry and urban residents … forced to sell goods and products to the state at discount prices … to submit to a set of exchanges that built relative prosperity in the cities while confining peasants to the penurious countryside” (Chen 1999:107–108). The danwei system instituted in the SREs supported a feudal class structure by its direct shaping and controlling of workers’ lives on the job and in their homes and family lives. The danwei system is the name given to a complex institutional relationship that existed between workers and the urban state-run enterprises. In this relationship, labor was obligatory and workers were permanently employed. Furthermore, they and their families were provided the entire array of subsistence goods, including housing, medical care, education, and subsidized food and clothing in exchange for worker loyalty and the performance of surplus labor (Gabriel 2006:45–49). If workers were eating, sleeping, and working together within the communes, or SREs, why isn’t this communism? One way to answer this question is with an example from the capitalist world. Most would agree that GE is a capitalist corporation because it enters into impersonal wage labor contracts with workers who are free to sell their labor to GE, or not. In addition, GE’s board of directors is the first receiver of the surplus value that is produced by GE’s wage laborers, which it then distributes to various agents both within and without the corporate entity in order to continue to exist. But what if GE was to provide a cafeteria for its workers and allow them to eat for free at the cafeteria as long as they are working for GE? Would that constitute communism?

what happened to chinese communism

123

Telecom firm Cat Communications, is one of a handful of U.S. firms to provide free food to employees. Many restaurant and food service businesses also provide free meals to their employees. Therefore, it is not an uncommon practice. A similar situation existed in the communes and SREs. Being supplied free food, housing, etc., in a collective manner, does not change the fact that these workers have a feudal bond to their communes or SREs. This does not change the condition of the laborer as performing surplus labor on the basis of feudal bondage to the state. In other words, laborers in the communes and SREs had an implicit contract to serve these institutions and they did not have a choice in the matter. The fact that they received food at a collective cafeteria does not change the way the surplus was appropriated or the way they worked. Free cafeteria food was just another way necessary labor was provided – in this case feudal necessary labor. It was still feudal necessary labor because the surplus labor was not collectively appropriated, as in communism. Why did Chinese rural and urban direct producers accept a feudal class structure in which to produce surpluses and deliver them to the State Council? Why did they accept the hukou and danwei systems? A particular set of non-class processes (political, cultural, and economic) influenced and pushed Chinese direct producers into those acceptances. Tang and Parish (2000) argue that the Chinese party-state entered into a ‘socialist’ social contract with its citizenry that directly organized nearly every aspect of their personal lives. The state’s social welfare programs intertwined with its social control programs to demand and enforce a direct personal relation of obligation on the part of workers to produce surpluses in the SREs. Rather than impersonally selling their labor power to an SRE in exchange for a wage, Chinese producers accepted the condition of being bound to their jobs as part of a densely intertwined economic, political, and cultural social system within which they were assigned the role of worker as well as other state-shaped roles in families, households, and communities. They felt the call to fulfill all these roles as a personal obligation to the CPC and the Chinese state rather like the personal obligations medieval European serfs felt toward their own lord and up through the hierarchy to God as ultimate Lord. The CPC and the Chinese government labeled ‘socialist’ this combination of extensive social welfare programs, intensive state controls of all aspects of workers’ lives, and the consequently personally felt labor obligation of the workers. Images of the state as benevolent social

124 satya gabriel, stephen a. resnick, and richard d. wolff organizer and provider, and hence the proven vehicle for meeting the needs of the Chinese people, worked to preclude any consciousness of the state’s class position as receiver of the workers’ surpluses. Indeed, scholars generally agree that the CPC policy of providing basic subsistence and social services raised the level of rural and urban living standards and life expectancy (Bramall 2000; Howard 1988; Hussain 2003; Knight and Song 1999; Selden 1988). The material gains of the Chinese masses served to reinforce the state feudal class structure. What unsympathetic critics referred to as the ‘iron rice bowl,’ class analysis would understand rather as state feudalism with benevolent characteristics (Gabriel 2006). Popular support for the ‘socialist social contract’ enabled growth in production and some degree of accumulation based on a feudal class structure. However, Chinese state feudalism, like other feudal class structures in other places and at other times, had internal contradictions as well as contradictory relations with the political and cultural processes in Chinese society. These contradictions surfaced in workers’ resistances to various aspects of Chinese feudalism, in conflicts between industrial and agricultural sectors, in tensions between political and economic leaders, and so on. However, in the specific conditions of the PRC, the contradictions accumulated and eventually exploded in the internal struggles at the highest levels of the CPC and were resolved in a policy of class transition.

The Chinese Transition to State Capitalism Throughout the PRC’s history, internecine conflicts within the ruling CPC pitted those who prioritized what they called ‘the politics of class struggle’ against those who prioritized capital accumulation and industrial modernization. These conflicts complexly shaped the policies that originated within the Party, the composition of its membership, and thus the whole of Chinese society. Of course, CPC conflicts did not alone determine Chinese society and history, nor were those conflicts simply about political class struggle versus expanding production. Many other factors – economic, political, environmental, and cultural – were effective in shaping Chinese society and the CPC. However, we focus here on the struggle between ‘Maoists,’ who prioritized political class struggle, and ‘modernists’ who emphasized economic growth as a useful metaphor. It facilitates a class analysis of the basic social contest

what happened to chinese communism

125

in China between two broadly philosophical ways of understanding and pursuing social change, the appropriate role for the Party, and the optimum path to communism. The Maoist era is understood as the quarter-century after 1949 when Mao’s prioritization of class struggle prevailed: its chief markers were the Great Leap Forward and the Great Proletarian Cultural Revolution. Its overarching theme was the dominant role of the central government in all aspects of social life. Local political leaders and regional and local enterprises’ top managers – whose authority was weakened by the ever-expanding power of the central bureaucracy even as it demanded ever more surpluses from them – often struggled against many Maoist policies. The resulting planning problems and mistakes, economic corruption, and the expanding bureaucracy needed to monitor and control local leaders, entailed huge, unproductive costs for maintaining the Maoist status quo. These costs became flashpoints for critics of Maoist class struggle policies, considered at best premature, given China’s actual economic and political conditions, and at worst dangerous, because they diverted scarce resources from capital accumulation and economic modernization. Tensions accumulated and intensified between Maoists and modernists. Modernists continued to follow the orthodox (Stalinist) approach of focusing on the transformation in the forces of production as the fundamental catalyst for revolutionary change, whereas the Maoists focused on the relations of production. The Maoists believed that is was necessary to transform the social relations of production in order to have a genuine revolution. The rapid expansion of the communes at the end of the 1950s, covering the extent of rural China, was done in a spirit of compromise between Maoists and modernists. The Maoists wanted communes to be instituted as part of a great leap to communism. In other words, the Maoists envisioned genuine communal institutions. However, the modernists, led by Prime Minister Zhou Enlai, dominated the bureaucratic structure that implemented the communes. The modernists hoped to use the communes as vehicles for directing the flow of rural surpluses to accumulation and modernization. We will never know whether a genuinely communist commune system might have been successful at meeting the needs of the Chinese population because the Maoist objective was not achieved. Rather than a ‘great leap forward’ to communism, the communes might be more accurately described as an atavistic reversion to feudal economic structures, something quite

126 satya gabriel, stephen a. resnick, and richard d. wolff familiar to rural inhabitants, even when cloaked in the form of state control. The modernists did not achieve their objective when commune workers resisted this new feudalism by shirking and occasional sabotage, leading to shortfalls in the magnitude of extracted surplus. Despite the failure to fully satisfy either Maoists or modernists, from 1958–1966 the state feudal bureaucratic structures were consolidated. Furthermore, educational, health care, political, and leisure processes became tightly integrated with feudal class processes. In other words, feudal bonds came to dominate social life throughout the PRC. From 1966 to 1968, the Great Proletarian Cultural Revolution (GPCR) can be viewed, in part, as an attempt by the Maoists to uproot the state feudal bureaucratic structures and related political and cultural institutions. Although the civil unrest would subside in 1968, this struggle would not be fully resolved until after Mao’s death in 1976. After a twoyear interregnum, the modernists forged a coalition, with strong support from local leaders, enterprise managers and the PLA, and took control over the CPC and state bureaucracy. Modernist ‘reforms’ changed China’s class structure from state feudal to state capitalist (with a relatively small but growing private capitalist sector). First, the State Council received less and less of the surplus as local and regional political leaders, along with the chiefs of local and regional enterprises, increasingly replaced the State Council as surplus receiver. Second, the feudal social contract gave way to a typically capitalist labor market. Commodity markets proliferated alongside the increased ability of local and regional enterprise directors to determine their products’ prices and to become the first receivers and distributors of the surpluses produced by their employees. The State Council itself also changed from a state feudal to a state capitalist central receiver/ distributor of surpluses. Unlike the Soviet COM, however, the ‘reformed’ State Council occupied that state capitalist position only in relation to a subset of enterprises (‘keep the big, jettison the small’), in particular a small number of national strategic enterprises including oil, telecommunications, and construction materials. The State Council did not occupy that class position in the vast majority of what reformers declared to be ‘non-strategic’ enterprises. There, the receipt and distributions of surpluses were increasingly decentralized to township and village governments in the rural areas, and municipal governments in the urban areas (Lin 2001). Initially, the township and village enterprises (TVEs) were based on former commune industrial

what happened to chinese communism

127

enterprises. These rural state capitalist enterprises benefited heavily from the successes of farmers who, thanks to the household responsibility system (effectively a return to the 1950–58 policy of rural agricultural self-employment) instituted in 1978–79, were now predominantly ancients (Gabriel and Martin 1992). Modernist reform freed the direct producers from their politically and culturally embedded obligation (social contract) to labor for the socialist revolution (produce surpluses for the State Council). Chinese laborers could now seek employment where they wished. However, Chinese workers were simultaneously freed from the protections (lifetime employment, healthcare, education, etc.) formerly provided by the central bureaucracy. In class terms, the formerly feudal direct producers experienced a transformation into capitalist wage laborers employed by TVEs and SREs. Chinese workers depended now on a labor market instead of a central bureaucracy administering a comprehensive social contract. During the 1980s, the CPC leadership, with the support and at the urging of local government cadres, carried out the large-scale social engineering required to create labor power markets. Policy changes undermined the permanent employment and social security system inherited from the Maoist period. The reforms of the modernists weakened enforcement of hukou registration laws. This allowed rural direct producers to migrate both within the countryside and to urban areas to sell their labor power to rural or urban industrial enterprises, many of which had become export-oriented. These reforms gave workers relative freedom to sell their labor power to the highest bidder and to move geographically. Other reforms made these freedoms urgent necessities: to survive, Chinese workers had to sell their labor power and often had to move to do so, for even a minimal wage. As Marx noted, labor power markets are the result of “many economic revolutions, of the extinction of a whole series of older formations of social production” (1977:273). In post-Mao China, the emergence of labor power markets signified a revolution in the prevalent class process in Chinese society, from feudal to capitalist. The modernist-led CPC terminated state feudal bondage of direct producers while simultaneously freeing the state of many of its social obligations to those producers. These transformations resonated with the modernist worldview of the post-Mao leadership: China would look more like the USA and

128 satya gabriel, stephen a. resnick, and richard d. wolff other ‘modern’ societies.3 The movement from centralized state feudalism to decentralized state capitalism ended the patriarchal role of the central government as ultimate provider for the needs of both other governmental units and individual citizens. Local governments’ revenues increasingly would have to come from local state capitalist enterprises. The central government would likewise rely increasingly on decentralized state capitalist enterprises. Since Chinese citizens would rely ever more heavily on a capitalist labor market, the post-Mao era warrants description as ‘the extinction of a whole series of older formations of social production (i.e., Chinese state feudalism).’ As part of China’s transition from centralized state feudalism to decentralized state capitalism, the State Council reduced financial support for localities, forcing them to be more self-sufficient in funding community development and staff payrolls (Liu 1999; Oi 1999). Local governments had acquired state capitalist class positions as first receivers and hence distributors of surpluses generated within the TVEs and SREs. However, they also became responsible for enlarged local distributions of those surpluses, not only to secure and enlarge TVEs and SREs, but also more broadly to maintain local public services and community development. Receiving surpluses sufficient to make both kinds of distributions has proved a very difficult task even as local officials’ political, economic, and cultural influence widened and deepened as a result of China’s transition to a decentralized state capitalism. Decentralized State Capitalism and Globalization No doubt, many diverse factors overdetermined why the CPC was successful in achieving a fast-growing state capitalism and maintaining its governing role while its Soviet counterpart, employing a centralized

3 Ironically, the transformations initiated by the post-Mao leadership would have been difficult, if not impossible, without the Maoist period. The Maoist period facilitated the reform period through improvements in social ‘capital’ and infrastructure investment. In positive terms, the Maoist period was responsible for raising average education levels, improving health care access, creating or improving an extensive infrastructure of roads, bridges, and irrigation and flood control systems. The legacy of state feudalism also created a more ‘disciplined’ work force, as both rural and urban workers learned to follow orders within a context of collectivized work and a hierarchical command system. These Mao-era changes created conditions conducive to capitalist exploitation during the reform period (Gabriel 2006:45–82).

what happened to chinese communism

129

state capitalism, could not accomplish these goals. Local officials in China’s decentralized state capitalism, partly because of their distance (politically, culturally, and economically) from the directives of the Party and state centers, proved remarkably flexible in finding and developing local resources and exploiting local labor. The center increasingly allowed, and the localities actively pursued, opportunities to expand their state capitalist enterprises, including forging all sorts of alliances with other domestic and foreign capitalists. The shift from centralized to decentralized receipt of surpluses gave the TVEs and SREs the capital needed to make the most of these opportunities. While social welfare suffered, capitalist production soared. The actuality of prosperity for the few attested to the benefits of local state capitalism. So long as that could be plausibly coupled with the prospect of future prosperity for the many, the CPC maintained mass (although hardly universal) support for its state capitalist program. This arrangement, this positioning of a decisive decentralized state capitalist sector alongside a limited state capitalist center, sharply differentiated Chinese from Soviet state capitalism. In the specific conditions of world politics, the Chinese difference proved to be the better trajectory for a state capitalist economy. Because the USA sought to widen the separation and tensions between the USSR and China, it offered and the CPC accepted a more open and mutually advantageous relationship. The USA got certain kinds of Chinese ‘cooperation’ vis-àvis politically isolating the USSR. The CPC obtained access to the US market for its exports, contributing to the accumulation of hard currency to finance technology acquisition and improved infrastructure, which produced conditions conducive to large inflows of private investments from the USA, Europe, and Japan. These further enhanced the growth of TVEs and SREs in a ‘virtuous cycle,’ which also had no parallel in the USSR. For example, local state capitalists proved adept at making lucrative alliances with international capital. Wal-Mart and many other transnationals from the USA, Europe, and Japan became partners with Chinese state capitalists at the local levels. Access to global markets and technology provided by the transnationals combined with relatively inexpensive labor power, subsidized infrastructure, and other supports provided by local authorities. Stunning growth in foreign direct investment, output and industrial employment followed. Local state capitalist enterprises made large portions of their surpluses available to produce and secure the conditions of existence for growing capitalist

130 satya gabriel, stephen a. resnick, and richard d. wolff production of commodities for export. Those portions were not, as they might otherwise have been, distributed to the central state to be swallowed there in outlays for administration, communist party activity, military expansion, and other similar priorities of the central Party and state apparatuses. The center used its surpluses plus its taxes on local surpluses to secure its priorities, while the surplus left in the hands of local state capitalists sufficed to support rapid economic growth. The intersection of the CPC reforms with the orchestrated integration of global capitalist markets (in political terms, represented first by the General Agreement on Tariffs and Trade (GATT) and then the World Trade Organization (WTO) ) and the aforementioned geopolitics by which U.S. Cold War diplomacy provided an opening for Chinabased producers to participate in these markets, led to a rapid increase in exports. Exports to the Organisation for Economic Co-operation and Development (OECD) nations, particularly the USA, generated a growing horde of hard currency in the reserves held by the People’s Bank of China. These foreign exchange reserves (in the form of U.S. dollars, euros, and yen) provided governmental agencies and state and private capitalist enterprises with the currencies needed to import (both through purchase and licensing) technologies from the OECD nations. Thus, the goal of modernization has been advanced by decentralized state capitalism, providing clear evidence, particularly when manifest in material technologies and related artifacts visible to the public, of the effectiveness of modernist policies. The adoption of these new technologies, coupled with consistently high rates of accumulation, both domestic and foreign direct investment, has served to raise productivity of Chinese workers, further driving down the unit cost of tradable goods and allowing Chinese state and private capitalist firms to maintain high rates of export growth. At the same time, rising domestic incomes have contributed to expansion in domestic markets. Expanded domestic markets fostered growth in private capitalist firms, as well as growth in revenues for local and central state capitalist firms. The leading role of state capitalist firms in this rapid and sustained economic growth has not slowed the pace of privatization. The pervasiveness of corporatization in the most recent phase of the reforms has made it relatively easy for local governments and the central government to sell shares in state-owned firms. The modernist leadership has divorced the concept of socialism (with Chinese characteristics) from

what happened to chinese communism

131

state ownership. However, this same leadership has no particular distaste for state ownership and has proven to be fairly pragmatic when it comes to the issue of state versus private forms of capitalism, retaining significant minority stakes in most publicly traded firms. To paraphrase Deng Xiaoping, it does not matter if a capitalist firm is state or private, so long as it catches surplus value (which can be used for the further modernization of Chinese society).

Contradictions: From Local to Global Crises The successes of Chinese state capitalism have created new contradictions, many with directly global implications. The growth of capitalist labor power markets, epitomized by classic Lewis-style rural-urban migration after the feudal restrictions on mobility were first relaxed and then virtually eliminated, has resulted in a huge expansion in the absolute size of global capitalist labor power available for exploitation. This growth in labor power markets has placed downward pressure on the value of labor power worldwide. Rapid capital accumulation and expansion in production has generated strains on global supplies of raw materials, placing upward pressure on unit prices of steel, oil, aluminum, and a wide range of other commodities critical to industrial production. On the one hand, downward pressures on the global value of labor power create the potential for a classic ‘underconsumption crisis’ worldwide, where capitalist firms (benefiting from rising productivity and low wages) expand production faster than the growth in aggregate demand. While there is no necessity for such a crisis, the simultaneous decentralization and privatization of capitalist firms may increase the probability of such a crisis by reducing the ability of the state to direct investment and employment. The trend of rising commodity prices interacts with this potential by distorting the distribution of global incomes and raising costs for manufacturers of certain goods, pressuring profitability and, at least for some firms, threatening survival. These complex and interacting transformations in the global economic landscape are further overdetermined by the aforementioned rapid accumulation of foreign exchange reserves in China, coupled with the U.S. twin deficits in government financing and the current account. This dynamic threatens to weaken the primary global reserve currency, the U.S. dollar, and raise the cost of accumulation in the

132 satya gabriel, stephen a. resnick, and richard d. wolff U.S.A. at a time when the U.S. economy is already extraordinarily weak. The call by the leadership of the People’s Bank of China to replace the dollar’s reserve role with International Monetary Fund (IMF) special drawing rights, demonstrates that this process is partly politically determined. In a crisis context, the ability of the Chinese state to shape economic activities directly, via the continued dominant role of state capitalist firms, may be a key factor in moderating the negative effects of crises upon employment and incomes. To the extent this is recognized by CPC leaders, the current processes by which corporatized state capitalist firms are selling state shares to the private sector may be moderated or even reversed. However, whether or not this is the case, the underlying class process of capitalism does not appear to be in question. The current leadership of the CPC may continue to use the term ‘socialism’ to describe their policies, but there is no indication this implies transformation in these underlying class dynamics. References Alexander, Peter, and Anita Chan. 2004. “Does China Have an Apartheid Pass System?” Journal of Ethnic and Migration Studies 30(4): 609–29. Bramall, Chris. 2000. Sources of Chinese Economic Growth: 1978–1996. New York: Oxford University Press. Chen, Weixing. 1999. The Political Economy of Rural Development in China, 1978–1999. Westport: Praeger. Fraad, Harriet, Stephen Resnick, and Richard Wolff. 1994. Bringing It All Back Home: Class, Gender, and Power in the Modern Household. London: Pluto. Gabriel, Satyananda. 1990. “Ancients: A Marxian Theory of Self-Exploitation.” Rethinking Marxism 3(1): 85–106. —— . 2006. Chinese Capitalism and the Modernist Vision. London: Routledge. Gabriel, Satyananda and Michael Martin. 1992. “China: The Ancient Road to Communism.” Rethinking Marxism 5(1): 56–77. Howard, Pat. 1988. Breaking the Iron Rice Bowl. New York: Sharpe. Hussain, Athar. 2003. “Social Welfare in China in the Context of Three Transitions.” Pp. 273–312 in Nicholas C. Hope et al., eds., How Far Across the River?: Chinese Policy Reform at the Millennium. Stanford: Stanford University Press. Kayatekin, Serap. 1990. A Class Analysis of Sharecropping. Ph.D. dissertation, Department of Economics, University of Massachusetts-Amherst. —— . 1996. “Sharecropping and Class: A Preliminary Analysis.” Rethinking Marxism 9(1): 28–57. —— . 2001. “Sharecropping and Feudal Class Processes in the Postbellum Mississippi Delta.” Pp. 227–246 in J.K. Gibson-Graham et al., eds., Re/Presenting Class. Durham and London: Duke University Press. —— . 2004. “Recovering Feudal Subjectivities.” Rethinking Marxism 16(4): 377–396. Knight, John and Lina Song. 2000. The Rural-Urban Divide: Economic Disparities and Interactions in China. New York: Oxford University Press.

what happened to chinese communism

133

Lin, Yi-Min. 2001. Between Politics and Markets: Firms, Competition, and Institutional Change in Post-Mao China. New York: Cambridge University Press. Liu, G.G. 1999. Questions Related to the Reform of Small and Medium-sized Enterprises in China. Social Sciences in China 20(1): 5–15. Marx, Karl. 1977. Capital: A Critique of Political Economy, Volume 1. Translated by B. Fowkes. New York: Vintage. Oi, Jean C. 1999. Rural China Takes Off: Institutional Foundations of Economic Reform. Berkeley: University of California Press. Selden, Mark. 1988. The Political Economy of Chinese Socialism. New York: Sharpe. Tang, Wenfang and William Parish. 2000. Chinese Urban Life Under Reform: The Changing Social Contract. New York: Cambridge University Press.

CHAPTER SEVEN

LABOR REPRESENTATION AND ORGANIZATION UNDER STATE CAPITALISM IN CHINA Jackie Sheehan In this chapter I discuss the tensions in China generated by state capitalism and state corporatism in the relationship between the ruling Chinese Communist Party (CCP) and urban industrial workers. Under sustained pressure from labor for better industrial and political representation since the late 1980s, the CCP continues to repress any attempts to form independent labor organizations. Instead, it seeks to contain an increasingly restive working class, now much more exposed to the vicissitudes of the market and a correspondingly high level of employment insecurity, within the framework of state-controlled unionism under the All-China Federation of Trade Unions (ACFTU). There have been developments since 2006 which seemed to herald a break in the long impasse between a ruling Party that had abdicated its own role as labor’s representative, and a workforce which it would still not allow to generate representatives of its own. The government has attempted to boost the credibility of the official unions by extending their presence in the non-state sector, while the official unions have tried to portray themselves as authentic and effective grassroots organizers of labor. Furthermore, June 2007 saw the passing of what has been called “one of the most far-reaching labour laws in the world” (Economist 2008), which had the potential, at least, to redress the power imbalance between management and workers which had gone consistently in managers’ favor since the early 1980s. However, as I will show in this chapter, despite the promise, on paper, of the 2007 Labor Contract Law and the headlines about the reinvigorated ACFTU, the CCP’s relaxation of centralized control over a more open, ‘mixed’ economy has still not been matched in the area of labor representation by a greater tolerance of autonomous organization. The result is continued and intensifying conflict with labor. State capitalism, for the purposes of this chapter, is defined as a system where the means of social production are held privately from the

136

jackie sheehan

working classes and those who depend on them for survival; where there is no empirical evidence that the working classes control the organizations, such as China’s official trade unions, which are supposed to give them influence over the ruling CCP; and that the top Party leadership obtains wealth and power like a collective capitalist class extracting surplus value produced by the labor power of the politically impotent working classes. The second element of this definition also encompasses state corporatism, a system in which sectoral interest representation can only take place under ultimate state control, as in the case of China’s official trade unions. This state-capitalist perspective on the relationship between the CCP government and workers in the People’s Republic of China (PRC) is one which workers themselves had begun to articulate as early as the 1950s, and which resurfaced at all subsequent points of crisis in the CCP-labor relationship and into the post-Mao reform period (1978-present). The idea of the CCP as a new, exploitative ruling class which extracted surplus value from the working classes and passed on its privileges to its descendents, became a commonplace one on the radical wing of the Red Guard movement during the Cultural Revolution (1966–76). Thereafter, the Red Guard generation of workers and students, to whom the vocabulary of class exploitation still came naturally, carried the idea on into China’s nascent democracy movement from the late 1970s. Even before the inspiration of Poland’s Solidarity movement was available to Chinese labor, the conviction was widespread that, if workers ever could have regarded the CCP and the party’s subordinate institutions as representing their own interests, they now were in obvious need of independent organizations to defend those interests, within the workplace and in society (Sheehan 1998). The Polish events from August 1980 really just confirmed this and underlined the systemic nature of the problems of labor under one-party rule within the state-socialist world. The official trade unions, those affiliated with the ACFTU, were re-launched yet again in the early post-Mao period as credible organizations for the protection of workers’ interests. But once the ‘Solidarity panic’ which gripped the CCP government in late 1980 had passed, nothing was done to liberate them from their impossible role under state corporatism as a two-way ‘transmission belt’ between state and workers; a transmission belt which, in China, as in other state-socialist regimes, operated almost exclusively in a top-down way, as a means of imposing state preferences onto workers (Taylor, Chang and Kai 2003; Chen 2003). Given the mandate of representing both state and workers’

labor representation and organization

137

interests, the inevitable consequence was that the official unions would fail utterly as defenders of labor’s interests wherever those interests came into conflict with those of the state. The rise of the private sector in China, from the 1990s, and the CCP’s reform program aimed at removing the Party from its direct role in the remaining state sector, might seem to have removed the basis for this state-capitalist characterization of the Chinese system. However, real diversification of ownership under the most recent phase of stateowned enterprise (SOE) reform has been quite limited. Shares in ‘corporatized’ state companies are not always available to private investors, and a controlling, if not a majority, stake has generally been retained by the state in the component parts of the large company groups now being developed out of the old SOEs. Much day-to-day management decision-making does in fact now take place without Party interference, but the CCP still controls top appointments in the state sector and still holds SOEs responsible for preventing labor unrest, intervening in breach of its own reform aims to compel viable SOEs to take on the surplus labor of others (Hassard et al., 2007). Certainly, there has been no transfer of control over the means of production to workers, and no improvement in the functioning of the various institutions, including the official unions and the workers’ congress, through which workers’ influence is supposed to operate in the state and the private sector. Rather, the influence of those bodies, where it operates at all, is usually turned against the interests of workers. Turning to the private sector, long held back by political vulnerability, uncertainty over legal protection of property rights, and state officials’ rent-seeking behavior, it now accounts for a growing proportion of output and employment in the Chinese economy. But even in foreign-owned private companies, workers find themselves in very much the same position as in the old state sector. For one thing, the only unions available to them are those affiliated with the ACFTU, and although the CCP seems very pleased that it has succeeded in forcing private management to accept union branches, these branches are as ineffective as ever when it comes to listening to workers and helping them to defend their rights and interests against either management or the state. More will be said about this below. Secondly, rather than making common cause with labor against exploitation by foreign capital, the CCP government has proved to be far more comfortable working with private management to set up token union branches and collective contracts that barely touch on concrete issues of direct concern to workers, such as proper

138

jackie sheehan

payment for overtime and legal protection from excessive working hours, transparency in pay arrangements, consultation over lay-offs and redundancies, or prompt payment of wages and pensions. It is almost as if the Party has extended the benefits of state capitalism to China’s new economic elites, rather than the growing presence of private capital raising CCP awareness of workers’ plight. China’s post-Mao economic reforms have involved a vast program of legislation, and of course it would not have been possible to produce, all at once, a complete set of laws governing the workplace and labor-management relations. However, the sequencing of reforms in this area has not been a politically neutral process of meeting priorities in order of urgency; political decisions were made that resulted in the interests and prerogatives of management and the state consistently being placed ahead of those of labor. So the flurry of recent labor legislation, impressive as it appears to be, is in fact only a belated redressing of years of entrenched disadvantage to workers’ interests under economic reform in China. The net effect of successive reforms by the end of the 1980s was that labor, even in state-owned enterprises (SOEs), had come to see itself in an essentially capitalist employment relationship with state management. New laws and regulations bolstered management’s position to such an extent that managers were regarded as almost the private owners and exploiters of the enterprise and its workforce, just as the Red Guards had formerly cast the CCP in this role. The large-scale participation of SOE workers in the 1989 democracy movement in Beijing, and around urban China, came as a surprise to most observers, given state employees’ (undeserved) reputation as the CCP’s most reliable supporters during moments of political tension. This participation was subsequently explained by most observers with reference to rising concerns over the loss of job security after contract employment was introduced from 1986, and over the effects of high inflation rates in urban areas, which by 1989 were causing real urban living standards to decline (Walder 1987:41; Walder 1991:478; Wilson 1990:50; Warner 1995:61). But if closer attention is paid to successive reform measures experienced by workers in the first decade of reform, 1989 becomes far less surprising, and it is evident that a powerful part of the motivation for workers to join the protests was the extent to which they felt their social and political status to have fallen as a result of the reforms. Measures such as the Factory Director Responsibility System (FDRS) (Chevrier 1990; Child 1994:66) and the general emphasis on increasing the power of top management at the

labor representation and organization

139

expense of workers, their representative bodies, the workers’ congress, and the official trade unions, severely eroded any sense workers had previously of being ‘masters of the enterprise’ in any real sense. Warnings that the FDRS would undermine the already inadequate and discredited machinery of democratic management in Chinese workplaces were given as soon as the system was introduced (Sheehan 1998:200–201), but nothing was done to avert this outcome. Such was the intensification of management power by 1989 that the labor-movement press was speaking of the FDRS’s highly centralized management in the same breath as the Soviet-inspired “one-man management” of the early 1950s (Workers’ Daily, 27 June 1989). The idea of management as the owners of the enterprise in China, and of workers as their wage laborers, mere hired hands with no special political status doing as they were told by the factory director (Wang and Wen, 1992:265–266), was only reinforced by schemes such as the contracting-out of enterprises to managers for fixed periods. Often even the pretence of having to consult workers was dispensed with, as contracting-out decisions involving their own enterprise were communicated to workers through the news media, leaving workers feeling as if they were just part of the enterprise’s fixed assets for management to dispose of as it pleased. This degree of alienation represented a final breach in the old social contract in Chinese industry under which workers had been guaranteed security of employment, a minimum standard of living and a limited say in some areas of management, in exchange for tolerating low pay and not organizing independent unions. Workers emerged from this process in a much more unambiguously antagonistic relationship vis-à-vis management and state authorities, and even before the outbreak of the 1989 protests, they had become increasingly willing to respond in the obvious way, by use of the strike weapon and self-organization. These types of actions were by no means as rare before the late 1980s as is often supposed (Sheehan 1998), but in 1989 they became impossible to ignore, with the widespread formation of autonomous workers’ organizations explicitly intended to play a political role beyond the enterprise as well as defending workers’ interests within it. The CCP has consistently sought to classify the workers involved in 1989 as somehow not belonging to the true proletariat, and certainly not to the workforce of the former ‘commanding heights’ of the Chinese industrial economy, typified by large SOEs such as Beijing’s Capital Iron and Steel. But these workers’ activism was

140

jackie sheehan

documented; they were photographed, filmed, and interviewed, and government attempts to deny that they had the right to carry their workplace’s banners have remained unconvincing (Hassard and Sheehan 1997:85–86; Sheehan 1998:211–212, 219–221). What happened to the ACFTU after the repression of the 1989 protests followed a familiar pattern. Publicly, the official unions had only associated themselves with the student wing of the movement, although even in that they were conspicuous as the only CCP-controlled body to do so. But of more concern to the CCP than the donation the official unions had made to the students was their reported backing of a proposed general strike in mid-May, 1989 (Wang 1993:179). The proposals were vetoed by the student leadership in Beijing and so never came to anything, but a general strike would have taken the 1989 protests, most of whose participants had no intention of trying to overthrow the CCP to a new level. General strikes can and do bring down governments, and ACFTU backing for autonomous workers’ groups with memberships in the tens of thousands would have been hugely threatening to the ruling CCP, despite its confidence in the reliability of its armed forces as a decisive factor in how the movement played out. As had happened before in the aftermath of ACFTU attempts to reconnect with workers and put their members’ interests first, the ACFTU leadership was purged and the official unions at all levels were compelled to lead the condemnation of the ‘illegal’ independent labor organizations formed during the movement. (They were not illegal by choice, but because their attempts to meet the legal requirements for registration were rebuffed by the relevant government departments (Sheehan 1998:168, 221) ). But as had happened in the mid-1950s, when some enterprises continued to make minor concessions to labor following the Hundred Flowers protests, even after the repressive anti-rightist campaign was underway, the CCP was shrewd enough to know that the grievances which had found an outlet in union-backed protests in 1989, were real and to some extent justified, and that now more than ever, it could not do without its intermediary between labor and the state. In fact, this role was only going to grow in importance from the 1990s as the state worked towards its goal of withdrawing from direct involvement in management at the enterprise level (Zhang 1997:144). Getting government out of management even in those large or strategically significant companies that were to remain state-owned after 1997 was a key aim of the Modern Enterprise System (MES) reform program which was

labor representation and organization

141

implemented in state-owned industry between 1994 and 2010. After Jiang Zemin’s announcement at the 15th CCP Congress in September 1997 that, apart from some 500 remaining SOEs, the rest of the former state sector would be allowed to close, merge or go bankrupt as the market dictated, even more stress was laid on giving enterprise management the fullest possible autonomy from direct state interference. Alongside this latest phase of SOE reform from the mid-1990s ran the PRC’s first really large-scale program of lay-offs from state-owned industry, involving up to 50% of the workforce of some large SOEs (Hassard et al. 2007). This was an aspect of reform where the official unions (and the workers’ congress) were needed to play a role in persuading workers at least to accept, if without enthusiasm, the necessity of shedding labor if any of them were to be able to continue to work for the company as it transformed itself from a social and economic entity into a purely profit-oriented one. As members of the old SOE establishment quickly reconstituted under different titles in MES enterprises, union officials could play this role assured of their own continued “iron arm-chair” security, only liable to be moved sideways at worst, never down nor out (Hassard et al. 2007:145). While the SOE lay-offs were still underway, China’s 2001 World Trade Organization (WTO) accession increased the need for the CCP to appear to be on the same page as international bodies and investors with regard to permitting workers to join trade unions worthy of the name and allowing those unions to operate with an acceptable degree of independence from the ruling Party. The PRC did experience some success in this following the October 2001 revision of the Trade Union Law. The revised Law contained some provisions that, potentially, did seem to offer China’s workers more control over their own unions and more scope to use the union’s legal rights to defend their own interests. However, seasoned observers of the PRC’s industrial relations could not help noticing that the overarching insistence on the ACFTU’s political subordination to the CCP and its key responsibility for economic development, rather than for representing the interests of labor, were unaffected by changes to the Law. The changes did appear to have been sufficient for the ACFTU to recover its position on the governing body of the International Labour Organization (ILO), a position it had lost in 1989 through its participation, willing or otherwise, in the campaign of suppression and punishment of independent labor activism after June 4 (China Labour Bulletin, 2002). Although it is unlikely to be the source of the idea in China, north America’s experience with the

142

jackie sheehan

conversion of fake ‘company’ unions into local branches of national or US-Canadian industrial unions suggests that legitimizing tame company unions can be a successful strategy for capital, and a more subtle one than that of all-out confrontation (violent and legislative) with genuine trade unions. In addition to these government motives, there have always been within the ACFTU, even at the most unpromising times, those who have recognized that there is an opportunity for the official unions to carve out a more important role for themselves in an era of intensification of the labor process, punitive management styles (Zhao and Nichols 1996), and high levels of unemployment. There is also recognition in the ACFTU’s own ranks that, generally effective though CCP repression of independent labor organizing has been, doing a proper job of representing workers’ interests is ultimately the only way the official unions will be able to undercut the growing appeal of independent unions in China. The overriding priority of the CCP has not really shifted since the aftermath of 1989, however. The maintenance of ‘social stability’ has remained at the top of the agenda through successive challenges, such as the effects of the Asian financial crisis and the restive and angry late1990s and early-2000s phase of SOE lay-offs, which included major outbreaks of labor protest such as in Liaoyang, in the northeast, in 2002. The same approach was adopted in the run-up to the 2008 Olympics, when it was feared that groups with grievances would try to take advantage of the attention of the world’s media to press their case, and through 2009’s significant political anniversaries: 20 years since the 1989 pro-democracy protests, 30 since the beginning of the economic reform period, 60 since the founding of the PRC, and 90 since the May Fourth Movement, a key event in the CCP’s own genesis. With regard to industrial workers, the CCP government has tried to avoid widespread and serious unrest such as might threaten their hold on power, and has sometimes been prepared to adjust its reform timetables, though not to withdraw reforms altogether, in response to worker resistance. One example of this is how deadlines in the SOE lay-off program were extended as the original time-scale started to generate worrying levels of unrest. The government’s initial statements on the need for shedding surplus labor stressed an almost Thatcherite message (‘if it isn’t hurting, it isn’t working’) that the short-term pain of the process for the laid-off was a price which had to be paid for the longerterm viability of the companies concerned in an era of increased international competition after WTO accession. But by early 1998, quite a

labor representation and organization

143

marked change of attitude was evident, as the emphasis shifted to aiding laid-off workers and their families financially and expressing sympathy for their predicament. Even though the entire SOE reform program has been aimed at removing the Party from some of its statecapitalist role in the remaining state sector of industry (as already noted, it remains the main shareholder in all large ‘corporatized’ SOEs, so its capture of surplus value has not changed, even though it has taken a step back from direct control over the means of production), interventions to head off labor unrest are still a consistent feature of the behavior of the CCP, reluctant as it is to trust any of the available intermediaries (management, official unions, courts) to deal with labor when it really matters. The impact of the 1997–98 Asian financial crisis also hit SOEs hard, but that alone would probably not have been sufficient to bring about a three-year extension for SOEs’ lay-off deadline to the end of December 2003. The upsurge in labor unrest, strikes and protests sparked by the planned redundancy program hit some areas harder than others, but no geographical area or type or size of enterprise was free from them. The most common reports concerned the workforces of the smaller SOEs cut loose by the state after September 1997, which had either failed to pay workers for months at a time, or had closed down or been sold off very abruptly, perhaps to former managers for a token sum, in a way which suggested corrupt dealings to the workers who had lost their jobs. But even larger and very high-profile SOEs, often assumed to have the resources to cushion the blow of employment restructuring enough to avoid overt unrest, were in some cases seriously affected, and responded to government reminders about their responsibility for maintaining stability by adopting an even more cautious and gradualist approach to lay-offs. Some large SOEs even continued hiding surplus labor within the parent company after 2003, despite headline announcements that lay-off targets had been met (Hassard et al. 2007), and thus are still carrying significant parts of their old social ‘burden’ even as they are supposed to be turning themselves into globally competitive ‘champions.’ In dealing with major outbreaks of labor protests such as Liaoyang in 2002, while taking a very hard line against those it identifies as ring-leaders, sentencing them to long prison terms under state-security laws, there has been a notable reluctance to use lethal force against large gatherings of protesting workers (China Labour Bulletin, 2002–3 passim). Not only did the CCP government in 2002 want to avoid the opprobrium that it earned in 1989, but it also

144

jackie sheehan

realized that workers in China’s northeastern rustbelt, one of the areas hardest hit by SOE down-sizing, did have legitimate grounds for discontent, so that once an example was made of the main activists, the grievances of the others still needed to be addressed. By the early 2000s, then, the state-corporatist/state-capitalist dilemma for the CCP had taken shape: the Party wanted to withdraw from enterprise management almost completely and leave managers in charge of almost all decisions. Then the remaining SOEs could be transformed into ‘global champions’ able to compete internationally as economic entities, no longer serving as providers of welfare benefits and full employment as a social good, the role which they had performed for urban industrial workers and their dependents in the Mao era. At the same time, the multiple impacts of reform convinced more and more workers of their need for an independent union organization under members’ democratic control that could defend their interests against the impositions of an assertive new managerial elite. The logic of the diversification of Chinese society at this stage of the reform period suggests that as the CCP has more or less admitted that it no longer represents the interests of labor (since former CCP leader and President Jiang Zemin proposed his theory of the ‘Three Represents’ in 2001, positioning the Party as the vanguard of China’s new elites rather than of workers and peasants), it is time to permit workers, and other groups, to go beyond the bounds of state corporatism and develop genuinely representative bodies of their own. Yet to do so would be to break the CCP’s long-held monopoly over social organizations, a principle which it refused to concede even in the face of the massive urban protests around China in the spring of 1989, and to which it holds most strongly in the case of organized labor (Chen 2003:1022–1023). If the CCP will not make this concession, the result will be labor unrest that pushes the official unions aside to challenge the state directly, and divisions within the official unions between those who are committed to playing only the role permitted by the Party and others who see their future as depending on becoming a real union responsive to members’ interests even when those diverge from the interests of the state. Has this dilemma been resolved in the flurry of ACFTU activity and labor legislation that China has recently experienced? After initial signs that real change might be occurring, the answer for now seems once again to be in the negative. It is easy to see how the excitement about a new and reinvigorated ACFTU came about when, of all the multi-national corporations in all the world, China’s official unions

labor representation and organization

145

walked into Wal-Mart, thus grabbing the attention of the international labor movement. Furthermore, the Wal-Mart unions were created because groups of employees in these stores had, at the instigation of ACFTU officials, got together the requisite number of signatures and gone to management to demand a union as their legal right, rather than the deal being done directly between ACFTU officials and company management (a route the ACFTU had already tried with WalMart without success) (Chan 2006), and so appeared to be a unique example of successful grassroots union organization in the PRC. When more closely examined, however, the ACFTU’s campaign to unionize foreign-owned enterprises, and the specific union activity in Wal-Mart, conform to a pattern familiar from the past. The ACFTU, as Anita Chan has pointed out, suffered a major loss of members from the mid1990s because of SOE lay-offs, so moving into the private sector, starting with some of the highest-profile foreign-owned companies, has been a way of shoring up its membership (Chan 2006), as well as being a response to instructions direct from CCP leader Hu Jintao (China Labour Bulletin 2006a). The idea that Wal-Mart’s and other union branches in foreign-owned companies were set up on workers’ own initiative and were under their control has also foundered somewhat, as the collective agreements signed between unions and management with so much fanfare have often had so little meaningful content, being based on the ACFTU’s rudimentary template, that they have no impact on working conditions or workers’ overall influence in the workplace. An attempt by Guo Haitao, the ‘hero of Wal-Mart,’ to conduct real collective bargaining over a meaningful collective contract in his store was evaded when management simply convened a workers’ congress to rubber-stamp the basic agreement provided by the ACFTU and got a union representative from another store to sign off on it when Guo refused; he subsequently resigned his union post (China Labour Bulletin 2006b). If the ACFTU’s much-vaunted unionization drive among China’s Fortune 500 companies has done little or nothing for members’ interests and democratic influence in the workplace, what about the 2007 Labor Contract Law, which came into force in January 2008? This legislation seemed genuinely to frighten foreign and domestic employers when its final draft was approved in June 2007. Aiming to put a stop to some of the worst abuses of workers’ rights (particularly those of migrant workers), the Law requires companies to give written contracts even to short-term, casually–employed staff, mandates

146

jackie sheehan

compensation for redundancies, gives workers who have completed a certain number of years, or two temporary contracts, the right to an indefinite employment contract, and prevents abuse of over-long ‘probationary’ periods to evade employer responsibilities. It also tackles health and safety abuses such as excessive overtime, a perennial problem in Chinese industry which the beginnings of a migrant labor shortage in areas like Guangdong, from around 2004, did nothing to improve. It seems to be aimed squarely at China’s worst employers by a government that, while it was happy for China to be the world’s workshop, became increasingly concerned at the country’s image as the world’s sweatshop, and at scandals such as the Shanxi brick-kiln coerced labor cases of 2007. Of course, certain caveats apply to any positive new legislation in the PRC: could the new Law be enforced by an understaffed and under-resourced network of inspectors, especially since local government was more likely to side with tax-paying, jobcreating employers rather than protesting workers in the event of a dispute? Reports of massive increases, of up to 150%, in the number of labor disputes going to court in 2008 attributed the rise in part to workers’ increased awareness of their legal rights following the passing of the Labor Contract Law. However, independent union activists also suggested that many fewer cases would end up in court if the official unions did a better job of helping workers resolve their grievances directly with employers (South China Morning Post, 14 July 2009). Evasion of their new responsibilities by employers has also been widespread. Firing all workers who were approaching legal entitlement to an indefinite contract and making them re-apply for their jobs has been a popular way to postpone full compliance, although the outcry when telecoms company Huawei did this to thousands of employees was such that it was forced to suspend the plan (China Labour Bulletin 2009.) Some workers still do not have written contracts, or have them written in English instead of Chinese, bearing the wrong company seal, or blank, making them legally unenforceable and worthless (China Labour Bulletin 2009; South China Morning Post, 29 January 2009). Before it was possible to tell how strongly local authorities would back workers’ attempts to use their new legal rights, the global recession hit China, and local governments in many areas have explicitly permitted employers to continue to violate many provisions of the new law, asking only that they seek prior permission for any large-scale lay-offs which might generate unrest (China Labour Bulletin 2009; South China Morning Post, 29 January 2009). This does not mean that workers will

labor representation and organization

147

never be able to make use of the provisions of the 2007 Labor Contract Law, but it has set back real progress in workers’ ability to defend their rights at work, individually and collectively, by several years, on top of the years of head start that the pro-management sequencing of reformera workplace legislation had already given to employers. The net result of a system where courts and local governments will not enforce legislation protecting workers’ rights, while official unions continue to disregard and bypass the views of actual workers when concluding so-called collective agreements with employers, is that workers with a grievance still find it most effective to take action directly, themselves, and in some cases to organize themselves, in the absence of effective institutions within the CCP system. Most workers, when the need arises, favor peaceful industrial action as a way to influence employers, regarding it as quicker, cheaper and more effective than going to court, and less likely to attract police repression than violence. However, others act according to the saying that “a small fuss solves small problems, a big fuss solves big problems, and no fuss solves no problems,” as in the case of the Tonghua Iron and Steel company in Jilin province in July 2009 where the manager died from his injuries during a violent confrontation between workers and riot police over plans for a private enterprise to take over the steel mill (Radio Free Asia, 27 July 2009). This is reminiscent of labor discontent at the height of the Hundred Flowers campaign of the mid-1950s, or of the late 1980s, when SOE managers were hiring bodyguards to protect them from angry workers (Sheehan 1998:208). Most collective action by Chinese workers is limited to those affected directly by a particular issue – for example, a single company’s pensioners, or laid-off workers – given the high cost of such action in terms of state repression (Cai 2006). However, solidarity action is not unknown, and unrest involving thousands can develop in areas like the northeast where widespread lay-offs and unemployment create common cause across enterprise and city boundaries. In the Jilin case, protests quickly spread from pensioners to current employees and their families, since, as one participant remarked, “If Tonghua went under, then none of the people living in this district would have any way of making a living” (Radio Free Asia, 27 July 2009). Do China’s workers really need independent unions? Some have asked whether it matters if the ACFTU is a real union or not (Taylor 2007). I would say that it does matter, not least because while the ACFTU is the only legal union in China, any group of workers who

148

jackie sheehan

find it inadequate when their rights have been infringed upon, by management or the state, and bypass it, will find themselves automatically classed as criminals and their attempt to have legitimate grievances resolved treated as a threat to state security. The CCP government tends to intervene directly only when a ‘big fuss’ compels it to do so, teaching workers that only those prepared to cause trouble will get a response. The Chinese system is thus in danger of developing into one which only responds to a crisis, and which, after thirty years of reform, still cannot provide effective means for resolving workers’ grievances with employers within the state-corporatist system. In the remaining state sector, the official unions still seem unable to turn themselves into truly effective intermediaries between workers and the state, while the CCP’s prioritization of ‘stability’ perpetuates SOEs’ role as employers of last resort behind claims of successful down-sizing, leaving the relationship between the CCP and state-sector workers much less changed in its fundamentals than might be expected so far into the reform program. And, in a final twist on state capitalism, both the CCP and the official trade unions would rather deal directly with private-sector management to meet their collective-agreement quota (Taylor, Chang and Li 2003:206) than try to find out what China’s workers really need and empower them to organize so that they can get it themselves. References Cai Yongshun. 2003. State and laid-off workers in reform China. London: Routledge. Chan, Anita. 2006. “Made in China: Wal-Mart unions.” YaleGlobal Online. http://yaleglobal.yale.edu/content/made-china-wal-mart-unions. Chen, Feng. 2003. “Between the state and labour: the conflict of Chinese trade unions’ double identity in market reform.” China Quarterly 176: 1006–1028. Chevrier, Yves. 1990. “Micropolitics and the Factory Director Responsibility System, 1984–1987.” Pp. 109–133 in Deborah Davis and Ezra Vogel, eds., Chinese society on the eve of Tiananmen. Cambridge, Mass.: Harvard University Press. Child, John. 1994. Management in China during the age of reform. Cambridge: Cambridge University Press. China Labour Bulletin. 2002. “CLB analysis of the new Trade Union Law.” Hong Kong: China Labour Bulletin, http://www.china-labour.org.hk/en/node/8787. ——. 2006a. “Wal-Mart unionization drive ordered by Hu Jintao in March – a total of 17 union branches now set up.” Hong Kong: China Labour Bulletin, http://iso. china-labour.org.hk/en/node/39060. ——. 2006b. “Union chair resigns over the imposition of collective contracts at WalMart.” Hong Kong: China Labour Bulletin, http://www.clb.org.hk/en/node/100310. ——. 2009. “Going it alone: the workers’ movement in China (2007–2008).” Hong Kong: China Labour Bulletin http://www.clb.org.hk/en/node/100507. Economist. 2008. “Membership required.” 31 August. http://www.financialexpress .com/news/membership-required/345017/.

labor representation and organization

149

Hassard, John, and Jackie Sheehan. 1997. “Enterprise reform and the role of the state: The case of the Capital Iron and Steel Works, Beijing.” Pp. 73–103 in Ayse Bugra and Behlul Usdiken, eds., State, Market and Organizational Form. Berlin: Walter De Gruyter. Hassard, John et al. 2007. “Steeling for reform: state-enterprise restructuring and the surplus labour question.” Pp. 203–228 in Grace Lee and Malcolm Warner, eds., Unemployment in China. London: Routledge. Radio Free Asia. 2009. “Steel boss dies after riot.” Washington, D.C.: Radio Free Asia, 27 July 2009, http://www.rfa.org/english/news/china/jilin-riot-07272009100639. html?textonly=1. Sheehan, Jackie. 1998. Chinese Workers: A new history. London: Routledge. Taylor, Bill, Chang Kai and Li Qi. 2003. Industrial relations in China. Cheltenham, UK: Edward Elgar. Taylor, Bill. 2007. “Is the ACFTU a union and does it matter?” Journal of Industrial Relations 49(5): 701–715. Walder, Andrew. 1989. “The political sociology of the Beijing upheaval of 1989.” Problems of Communism 38(5): 30–40. ——. 1991. “Workers, managers and the state.” The China Quarterly 127: 467–92. Wang Shaoguang. 1993. “From a pillar of continuity to a force for change: Chinese workers in the movement.” Pp. 177–190 in Roger V. Des Forges, Luo Ning and Wu Yen-bo, eds., Chinese democracy and the crisis of 1989. Albany, New York: State University of New York Press. Wang Zhuo, Wen Wuhan et al. 1992. An evaluation of Guangdong’s opening and reform (Guangdong gaige kaifang pingshuo). Guangzhou: Guangdong People’s Press. Warner, Malcolm. 1995. The management of human resources in Chinese industry. London: Macmillan. Wilson, Jean. 1990. “Labor policy in China: Reform and retrogression.” Problems of Communism 39(5): 44–65. Workers’ Daily (Gongren Ribao), dates in text. Zhang Yunqiu. 1997. “An intermediary: the Chinese perception of trade unions since the 1980s.” Journal of Contemporary China 6(14): 139–152. Zhao, Minghua, and Theo Nichols. 1996. “Management control of labour in stateowned enterprises: Cases from the textile industry.” The China Journal 36: 1–21.

CHAPTER EIGHT

A CONSIDERATION OF CHINA’S INCOMPLETE RETREAT FROM STATE CAPITALISM* Rumy Hasan Introduction In this chapter I examine China’s political economy since the 1949 revolution from a state capitalist perspective – that is, Mao Zedong’s avowed modelling of China on the state-owned, Soviet command economy – and the subsequent retreat from this in the post-Mao era. This approach accordingly downplays the view of those who maintain that China’s development path was grounded in its history, philosophy and culture. These introductory remarks summarize the definition of state capitalism I use in this chapter. The theoretical appeal of this perspective lies in how intense, military competition and concomitant development of the heavy industrial sectors dictate the path taken by the whole political economy. In section two I chart the gradual retreat of state control over the economy following the death of Mao in 1976, and the adoption of Deng Xiaoping’s Four Modernizations in 1978 that led to the ‘dual track’ approach. Section three concentrates on the factors that have led the Chinese economy to achieve unprecedented growth rates for more than a quarter of a century; that is, increases in trade, investment, and the setting up of Special Enterprise Zones in the coastal provinces. Section four examines some of the consequences of this economic boom, and I argue that there has been the creation of what can be generalized as ‘two Chinas’ – the booming coastal provinces, and the relatively backward Central and Western provinces. In section five and the concluding section, I attempt to gauge the political implications of the retreat of state capitalism and argue that that the profound restructuring of state and capital since 1978 has led to the

* My warm thanks to Nigel Harris, Vincent Pollard, Frances Weightman and anonymous referees for several valuable comments and criticisms.

152

rumy hasan

reconfiguration of classes which, I argue, will have inevitable and significant political ramifications. China presents an unusually awkward example to those who believe (or believed) it in some sense to be ‘socialist’ or ‘communist,’ as its leaders have proudly proclaimed since 1949. On the assumption that stateownership equated with socialism, since the post-1978 reforms, China has indeed been shifting away from such a ‘socialism’ as it has increasingly resorted to the market mechanism and contemporaneously allowed increasing levels of private ownership. In such terms, China has relentlessly become more and more a ‘capitalist’ economy or, as its leaders see it ‘socialism with Chinese characteristics’ (or, more accurately, in their terms, ‘socialism with capitalist characteristics’). What is awkward for the erstwhile defenders of the Maoist state is that this shift has led to an astonishing surge in productivity, output, and growth – and in living standards. The pressure to make such a shift had been mounting as a result of the abject failure of the old system given that, under Mao, living standards had barely risen.1 There is, however, a case for pointing out that, positively and negatively, the Mao period laid the basis for the reforms championed by Deng Xiaoping in 1978 and afterwards. On the one hand, better education and health among the Chinese people (agricultural and industrial working classes) and the building up of basic industry laid a foundation on which Deng’s reforms were built. On the other hand, fatigue incurred from forced participation in endless political campaigns certainly left many Chinese open to economic reform with less emphasis on political changes that required personal participation. Also, those managers and directors of stateowned enterprises who had suffered as political targets during the Cultural Revolution but who had physically survived, were, nonetheless, sufficiently demoralized as to be unable to defend ‘their’ stateowned enterprises against pressures for decentralization or against supervised privatization. In this chapter I suggest a different perspective to understand China’s shift. The argument is that China, like the former Soviet Union, was a state capitalist economy operating a centralized, authoritarian command economy. As other chapters in this volume show, state capitalism can be defined in different ways – indeed this is perhaps why it remains 1 Though the per capita income rose by 2.3 per cent p.a. between 1952–78 (Maddison 1998:66), much of this was allocated to the military industry complex, and not for improving welfare and living standards.

china’s incomplete retreat

153

an exciting political and economic category. In this chapter, I denote state capitalism to refer to the external competition of a state-owned, command economy. This is in sharp contrast to internal competition confronting economic agents in a market economy. What makes both types of economies capitalist is the centrality of competition and capital accumulation. Specifically, in the case of the USSR, the fundamental external relation that permeated the whole economy and planning priorities was military competition with western powers. Given that the economy was almost entirely under state ownership, and the market was suppressed, being replaced by administered prices, there was no internal competition on the basis of market prices. Nonetheless, military competition did impose a powerful dynamic of accumulation. Following Marx, what crucially distinguished capitalism from pre-capitalist modes of production was indeed competition and accumulation (thus, though markets existed in feudalism and classical antiquity, with a concomitant degree of competition, there was not the paramount dynamic of accumulation). From this arises the deduction that any economy under state ownership under the rule of a bureaucratic class – where workers do not have control over the means of production – engaged in external competition, can be deemed ‘bureaucratic state capitalist’.2 This definition contrasts with the one used by Mao in a short comment ‘On state capitalism’ written in 1953. Mao described China as a state capitalist economy of a ‘new type’ where the profits made predominantly go to meet the needs of the people and the state. He equated state-ownership with ‘socialism’ (Mao 1977 [1953]:101). The definition can also be contrasted with the one which is perhaps the most widely used: where the core economic actors are private but the state provides a central guiding force.3 It is as a state involved in active military competition with the outside world – the motor for the industrialization drive based on heavy industry – that also makes Maoist China bureaucratic state capitalist. But the USSR and China were by no means identical. For example, the centre was stronger in the USSR; whereas the provinces had greater autonomy – hence were more difficult to control – in China, which was 2 The clearest statement of this version of state capitalism is by Cliff (1988) and extended by Kidron (1968). The origins of the theory go back to Bukharin (1972 [1915]). 3 For a discussion of various definitions, see Pollard, 2001.

154

rumy hasan

far more agrarian in character and development. Nonetheless, Mao explicitly modelled post-revolutionary China, with its Five-Year Plans, under a command system, explicitly on the USSR, so that the two economies were of the same generic type. This remained the case even after Mao began to somewhat veer away from the Soviet-type system in the late 1950s. Mao’s version of state capitalism or ‘Stalinism’ was just as brutal as Stalin’s – marked by the absence of democracy and scant regard for human rights. The famine caused by the Great Leap Forward (1959– 61) undoubtedly caused more deaths in China than the famine caused by forced collectivization had done in the USSR in 1929–33 (Haynes and Husan 2003:ch. 3). Chang and Halliday (2005:457) assert that “this was the greatest famine of the twentieth century – and of all recorded human history.” The Cultural Revolution of the 1960s was another catastrophic disaster that set the economy back by perhaps a decade. The ensuing chaos shattered the economy and society and, in the process, millions of lives. These were yet more monstrous acts conducted in the name of ‘socialism.’ The core dynamic of Mao’s China was rapid accumulation to ratchet up the defence and heavy industrial sectors in order to militarily compete with the outside world including, revealingly, the USSR from around 1960 – albeit at a much more modest level than the USSR/ Warsaw Pact countries. And, like the USSR, in Oskar Lange’s memorable epithet, China became a sui generis war economy (Lange 1957:18).4 After Mao’s death, a section of the leadership under Deng realized that a radical change in the direction of the economy was needed to pull the economy from its stagnant bind. At a time when Japan and the East Asian ‘tigers’ were surging ahead, China had become the ‘sick man of Asia’ and suffered greatly from technological backwardness. Indeed, Chinese ‘socialism’ had become precisely what critics had argued would be inevitable under socialism: a stagnating economy, lacking innovation, and struggling to provide little more than the basic needs of the population. Hence, in 1978, Deng’s ‘Four Modernizations’ (of agriculture, industry, science and technology, and defence) were launched and ‘enrich yourself ’ became a clarion call. Note, however, the rather underplayed fact that the announcement and promotion of

4 Harris (2003:4) provides a persuasive generalization to this whereby modern states are by their nature ‘war-making.’

china’s incomplete retreat

155

‘Four Modernizations’ originated with Zhou Enlai from the late 1950s (Reardon 2002:112ff.). It was in the coastal provinces that the impact of the reforms was felt the most.5 The reasoning was that the incentive system under the command economy gave rise to depressed productivity with concomitant low output and income growth. Centralized planning appeared to be stifling individual and local commitment, enthusiasm, and endeavours. This was certainly true but the leadership avoided confronting the real cause for the economic and social malaise: a profound alienation affected the majority of the population in all aspects of life. The old adage of Stalinist economies, ‘they pretend to pay us so we pretend to work,’ encapsulated the root cause of the problem. So there began a gradual yet inexorable relaxing of the economic levers. But, when it came to political power, the Chinese Communist Party (CCP) maintained a very tight and relentless grip and has never tolerated any independent opposition. The Gradual Retreat from the Command Economy China’s economic reforms were gradually implemented two years after Mao’s death in 1976, and represented a sharp break from the economic and political policies of the Cultural Revolution decade (1966–76) that had, in essence, been about Mao’s attempt to regain political dominance after his humiliation in the aftermath of the Great Leap Forward (which can be described as ‘Stakhanovism writ large’ and, in reality, the Great Leap Backwards). In other words, for Mao, economic policy was, by and large, subordinated to political expediency. Mao’s strategy focused on “retrenching functional bureaucracies, decentralising economic power and mobilising the population under central ideological guidance” (Riskin 1987:202). With the role of the central planners reduced, and no market mechanism upon which to fall back, emphasis was to be put on ‘self reliance’ for the provinces and, to some extent, enterprises. Though autarkic in practice, the policy did not entirely rule out trade. At a national level, this amounted to an importsubstitutionist strategy, particularly for the heavy industry and military sectors – at all costs, China was to be self-reliant in these. At a 5 These include the most economically dynamic provinces (also described as ‘Eastern provinces’) of Guangdong, Fujian, Zhejiang, Shanghai, Jiangsu, Shandong, Liaoning, Beijing, Tianjin. In this chapter, these are contrasted with what are termed ‘Central’ and ‘Western’ provinces.

156

rumy hasan

provincial, local, or enterprise level, however, the aim of self-reliance was to localize allocation decisions, and minimize external, that is, inter-provincial or foreign trade links, thereby simplifying the tasks of the central bureaucracy. Thus, at the national level, self-reliance was about minimizing the reliance on the world market, whilst at the provincial level, it was a substitute for both the domestic market and centralized planning. Mao put the argument as follows: We advocate all-round development and do not think that each province need not produce goods which other provinces could supply. We want the various provinces to develop a variety of production to the fullest extent … The correct method is each doing the utmost for itself as a means toward self-reliance for new growth, working independently to the greatest possible extent, making a principle of not relying on others … Reliance on other countries or provinces for food is most dangerous. (Mao 1977 [1960]:102–103)

Thus, specialization was eschewed and each region was to become, in effect, an economically autonomous mini-state subject of course to the overall directives by the central government. But the policy set in motion serious problems and contradictions. Devolving planning decisions to provincial bureaucrats within the context of a centralized plan on the one hand reduces the centre’s control and power and, on the other hand, depresses the supposed desire for ‘socialist cooperation.’ There was a recognition by Mao that effective central planning was extremely difficult. Ratcheting up the central levers may have exacerbated already existing centre/province tensions to the level of breaking point. Hence self-reliance was a method of divesting power but which implied the weakness of the central bureaucracy. Furthermore, as there are large differences in factor endowments, in particular between the southern coastal cities and provinces, and the interior provinces, sharp differences in income and standards of living would be inevitable. Ostensibly, this contravened Mao’s desire for egalitarianism but, in reality, this was not such an issue for Mao – indeed one of his close allies, Zhou Enlai, used Mao in his defence when he had railed against egalitarianism (Harris 1978:96–97). Like Stalin’s Russia, China had an elite bureaucratic ruling class whose power and privilege were far in excess of anything mustered by workers and peasants. Hence the ostensible equality was, in reality, the equality of deprivation and powerlessness – crudely disguised, to sweeten the pill, as a virtue and sacrifice for the nation. Indeed, Mao’s rule was one of apparent never-ending sacrifice and denial. In order to drive forward

china’s incomplete retreat

157

the process of capital accumulation and military competition, the state had to extract surplus and hold down living standards whose origins reside mainly in the consumer, service, and welfare sectors – sectors that had been accorded low priorities. After Mao’s death and the casting aside of his allies, the ‘Gang of Four,’6 it became safe for the new government to denounce Mao’s policies for bringing the economy to the brink of disaster. The denunciation was well-founded given that, by the mid-1970s, all the key indicators of living standards were stagnating in both cities and the countryside: incomes, food consumption, light industrial products, and availability of housing (White 1993:32). Structural imbalances were manifesting themselves in high levels of accumulation – at low levels of efficiency – in the industrial sector to the detriment of agriculture and light industry. Heavy industry, broadly defined, as a proportion of total industry, rose rapidly from 33 percent in 1952 to 72 percent in 1978; conversely, the share of light industry fell from 67 to 28 percent (Wu 2002:92).7 Inevitably, this resulted in low levels of consumption and reduced living standards. Thus, though the Chinese revolution had been a genuine advance that saw redistributive land reform, significant increases in welfare expenditure, and gently rising living standards till the debacle of the Great Leap Forward, taken as a whole, however, the Maoist regime’s impact after three decades had proved a thoroughly and increasingly disappointing one. The new government took the view that the over-centralized bureaucratic management encouraged dictatorial authority at the top as well as neglecting efficiency, innovativeness, and responsiveness to consumer needs. The conclusion was stark: the shunning of the market was thought to lead to severe imbalances within the economy. This was the reasoning behind the gradual abandonment of the bureaucratically planned economy and the launch of the ‘four modernizations’, that is, reform of agriculture, industry, science and technology, and defence. The strategy’s implementation involved two key components. First, a radical restructuring of the internal economy, involving a steady 6 The Gang of Four were allies and co-leaders since they ran the Cultural Revolution Group. But this denunciation was still fudged: the Party leadership gave Mao marks of “70% correct; 30% incorrect”. 7 During the early reform period, the share of heavy industry declined, but in the 1990s, it once more rose. But there has been a shift to the electrical equipment industry which is the foundation for consumer durables production, and hence has a favorable impact on living standards.

158

rumy hasan

reduction in central control over production and investment and the promotion of an internal market; second, the systematic opening up of the economy to the world market. The internal strategy was implemented in two stages – first agriculture and later, industry. Agricultural reforms centred upon decollectivization of the People’s Communes. The instrument of change was the contracted ‘Household Responsibility System’ (HRS). Initially, state procurement contracts were made with a production team, that is, a group of 30 or 40 households, and later, with individual households. The mechanism for achieving this was the disaggregation of communes into household plots which were then leased to the farmers for 15 years and later 30 years. The state procurement price was paid for the contracted delivery, but a premium price was paid for above-contract deliveries. The latter element was not obligatory and therefore could be kept or sold on the free market. It was this incentive that subsequently gave rise to the enormous rise in output: between 1957–78, the growth rate of agriculture increased by a mere 1.4 percent p.a. But once the reforms kicked in, growth exploded to 8.5 percent p.a. between 1980–85 – before slowing down to 3.9 percent p.a. during 1985–92; still well above the population growth rate (Nolan 1995:197).8 In regard to the industrial sector, the theme was also the retreat of the state as increasing powers were delegated to provinces and localities in budgetary matters. Enterprises were allowed greater autonomy in operational matters and, significantly, the right to the share of their profits. Concomitantly, the role of the market was to be gradually enhanced as administered prices were steadily replaced by market prices and a nascent capital market was to be created as interest began to be levied on bank loans in the attempt to prevent the inefficient, wasteful use of capital investment that had hitherto been provided free of charge. The liberalization of the economy and the delegation of power to the provinces did not imply that the situation of workers would automatically improve. On the contrary, the state demanded rigid discipline and granted few rights. But the number of ‘mass incidents’ (groups submitting petitions, sit down protests, strikes,

8 One region – Wenzhou (a coastal municipality in the south east of Zhejiang province with a population of 6 million) – attracted enormous interest for its rural reforms, following a rate of growth that was truly astonishing: real output grew at an average annual rate of almost 17 per cent between 1978 and 1986 (Bramall 1990:43). Also see other chapters in Nolan and Dong (1990).

china’s incomplete retreat

159

demonstrations, and riots) has in recent years increased markedly: from 8,700 in 1993 to 74,000 in 2004; and the number of reported protestors increased from 860,000 in 1993 to 3.7 million in 2004 (Wedeman 2006). Despite this significant rise in militancy, in the absence of independent, militant trade unions to give it direction, the balance of class forces was not altered.9 A peculiar hybrid form of enterprise also developed: that of the Township and Village Enterprise (TVE). These were not state-owned but rather what may be termed ‘local government’ owned enterprises (that is, owned by township and village communities) that produced for the open product market. In other words, they were not part of the central plan, hence cannot be considered as comprising a form of ‘decentralized state capitalism’; they were rather more akin to municipalities around the globe that own and run water, electric and bus services etc. TVEs were a critical factor in pushing forward the marketization of the economy. By the mid-1980s, markets existed for nearly all products but not for land and labor – which only emerged significantly during the 1990s (Naughton 1994:268). Under this constraint, the TVE sector rapidly expanded as it filled a niche left open by state-owned enterprises and competed with the slowly expanding private sector. However, by the end of the 1990s, TVEs were being increasingly transformed into other ownership forms, most notably joint stock cooperatives, but also leased or sold to private investors, or transformed into limited liability companies (Sun 2000:63, table 4). In the long run, as markets for land and property become well established, one would expect the TVE sector to fade away into an overwhelmingly private form. The overall trajectory of the industrial reforms took the economy onto a ‘dual track’ basis of production (Kaser 1987), that is, a combination of the plan and market in order to alleviate that bugbear of Stalinist command economies, the ‘shortage economy’. Thus, the state imposed quotas for enterprises below their productive capacities so that any production above the quota could be freely sold on the market. On the one hand, this allowed the central planners to have access to a predetermined (‘plan’) volume and mix of products in order to guarantee

9 Wedeman (2006) has convincingly argued that the Chinese state uses ‘strategic repression’ to maintain control, that is, a combination of tolerance for demonstrations with selective repression of individual militants, rather than an open attack on labor.

160

rumy hasan

necessary enterprise inputs for quota requirements, as well as for civilian and defence investments, whilst on the other, the market disciplines the production of the quota surpluses, thereby generating efficiencies. The balance between quota and non-quota production varied according to industry and within industry itself. Once the decision to shift to market determinants of allocation was taken, it naturally followed that a plethora of market-related reforms would follow, including the development of the banking system – encompassing specialist banks for agriculture and investment, and the implementation of bankruptcy laws. Premier and General Secretary of the Communist Party of China, Zhao Ziyang succinctly summed up the economic reasoning of the reform programme: ‘the state regulates the market and the market guides enterprises’ (cited in White 1993:65). This might be so in an autarkic economy, but is not the case for an increasingly open economy – where the global market (hence the law of value) disciplines enterprises. But, importantly, this marked the end of China’s ‘iron rice bowl’ (guaranteed wages and benefits regardless of productivity or output), an inevitable outcome of market clearing prices and inadequate welfare provisions. However, one should not forget that during the years of the Great Leap Forward and the Cultural Revolution, for millions, the bowl cracked, and they starved to death. Trade, Investment, and Special Enterprise Zones in Coastal Provinces Alongside the increasing recourse to the market mechanism internally, market pressures also ensued from the opening of the economy to international trade and investment. In 1978, China signed a trade agreement with Japan to allow exports to increase from both sides and, in 1979, the Law on Chinese-foreign joint ventures was passed, allowing Chinese enterprises to form links with foreign companies – a signal that foreign capital would be crucial to development. This marked the end of Mao’s self-reliance and isolationism and was tantamount to the CCP admitting the failure of state ownership and direction of the economy under its guidance. Zhao Ziyang summarized the volte face in 1981: By linking our country with the world market, expanding foreign trade, importing advanced technology, utilising foreign capital, and entering into different forms of international economic and technological cooperation, we can use our strong points to make up for our weak points

china’s incomplete retreat

161

through international exchange on the basis of equality and mutual benefit. (Zhao 1982:47)

Zhao is, in fact, succinctly providing the argument for an open market economy as a long term goal on the basis of comparative advantage. But China’s weak points were numerous and widespread whereas the strong points were, in reality, not much else apart from abundant, low cost labor. To overcome the weaknesses, the task became one of systematically creating ‘strong points,’ that is, achieving a dynamic comparative advantage in several sectors. Ostensibly, given its prominence in the economy, agriculture seemed the likely candidate especially taking into consideration that after the market-based reforms and the implementation of the dual track system post-1978, agricultural productivity and output expanded markedly. This notwithstanding, the leadership did not seriously consider an export-oriented strategy based on agriculture. Given that the fundamental drive of the Maoist state had been capital accumulation in heavy industry, and the belief that economic development implied, indeed required, industrial development, attention quickly turned to the other three elements of the ‘four modernizations’: industry, science and technology, and defence – with the science and technology being geared for the other two and not agriculture. In fact, modernization entailed developing entirely new sectors with the aid of foreign capital though foreign capital was not encouraged (and neither was it willing) in regard to modernizing the old, heavy industries. Therefore, the development drive would focus on those areas that could attract foreign investment for reasons other than plentiful and cheap supplies of labor. Consequently, geographical factors were of key importance and it was these, in combination with other advantages, that were crucial to the restructuring of the Chinese economy in the coastal provinces. Proximity to Hong Kong and (to a lesser extent) Taiwan, was particularly vital to this. Foreign trade would be vigorously encouraged. The rest of East Asia and the wider world would take on a much higher significance, implying that the new economic hub would center on sea ports. A consequence of this would inevitably be that the economic power of the coastal provinces would rapidly increase which, in turn, may also yield increased political power – and perhaps may also generate, for example, close political links between Guangdong and Hong Kong (see Kuan 1995; Guldin 1995 – note of course that these works came out two years before Hong Kong’s reversion back to the People’s Republic of China). A further consequence

162

rumy hasan

would be, and has been, the rise in provincial inequalities with the coastal provinces surging ahead, as well as intra-provincial inequalities (for example in Jiangsu, the income gap between the richer and poorer areas shot up between the early 1980s and late 1990s [Hendrische 1999:16]). Once the reforms were in place, it was clear that the whole economy was shifting to a different version of the dual track – broadly speaking, the coastal provinces to the market whilst the interior provinces remained under state guidance. At the same time, responsibilities were gradually devolved to the provinces. But whereas the coastal provinces increasingly demanded greater independence, less interference and intervention from the center, the interior provinces were heavily reliant on state protection, and therefore less enthusiastic about independence. What is clear is that state enterprises cannot compete in the open market and will, for the foreseeable future, continue to require high levels of effective protection, meaning that, in reality, they do not want genuine autonomy. But the intentions were clear throughout the 1990s: the Chinese state desperately desired GATT/WTO membership and was duly admitted to the WTO on 11 December 2001. To this end, China continually liberalized the economy with the implication that sooner rather than later, state enterprises would need to confront this harsh reality and undertake their own version of ‘structural adjustment’. This was robustly confirmed at the Third Plenary of the 16th CCP Central Committee in October 2003. One of the major tasks agreed was the: establishing of a unified, open, and orderly modern market system … by … coordinating urban and rural development, provincial development … and the opening up to the outside world … the role of the market in resource allocation is expected to be strengthened, the competitiveness of enterprises reinforced. (Xinhuanet 2003)

Though the aim is still to retain a large state sector, the Plenary decision provides a powerful signal to both the Chinese as well as to the outside world that China is serious about fulfilling the WTO criteria and does not intend to prevaricate. The writing is clearly on the wall for interior provinces and their state enterprises. An integral part of the liberalization and modernization program, and the restructuring of Chinese state capitalism that this entailed, was the seeking of foreign investment and the key conduit for this was a new institution: the Special Enterprise Zone (SEZ). In 1980, SEZs were

china’s incomplete retreat

163

created in the coastal provinces of Guangdong (at Shenzhen, Shantou, and Zhuhai) and Fujian (at Xiamen). The aim was to attract transnational corporations to develop predominantly manufacturing exportoriented industries. This was done by providing a battery of measures peculiar to the SEZs, including 100 percent ownership, tax concessions, zero tariffs, provision of infrastructure, no ownership restrictions, and other incentives. The aim was to establish links with Hong Kong, Taiwan, and South East Asia. This was helped by Guanxi-based business networks (good inter-personal relationships) between mainland and overseas ethnic Chinese. A Coastal Development Strategy was devised to attract foreign capital, technology, and management experience: in 1984, 14 coastal cities were granted ‘Open City’ status (equivalent to SEZs) and Economic and Technological Development Zones set up in these cities for technological acquisition. In 1985, Open Economic Development Zones (in the Pearl River Delta, Yangtze Delta, and South East Fujian Delta areas) were established to further encourage trans-border links and, in 1988, National Industrial Development Zones for New and Advanced Technology (NIDZNAT) were set up in 21 coastal city locations – equivalent to ‘Science Parks’ to improve indigenous high-tech capabilities (Dent 1999:121). The economic performance of the coastal provinces by the end of the 1980s was viewed as very encouraging by the regime, notwithstanding the fact of increased inflationary pressures (high price inflation was being felt in March 1989) that fuelled the Spring 1989 protests by workers and students. The CCP leadership, fearful that the course of action may be forced onto a different path, including revolution, resorted to uncompromising political repression. The dislocation that resulted was, in retrospect, minimal. The outside world, including all the major powers, soon forgot about the repression and abrogation of human rights. Trading with, and within, China had become far too profitable for any attempt to curtail it by way of sanctions. Opening up China for business to the outside world continued during the 1990s including cities in other parts of the country (North East and South West borders). At the same time, provincial governments were allowed to establish their own development zones. However, in general, it is the coastal provinces of China that have benefited most from economic development, due to their accessibility and the closer links, as noted, with overseas Chinese. China continued to open up its economy and in 1995, in negotiations for membership to the WTO, it reduced tariffs by 30% on 4,000

164

rumy hasan

products and removed 179 non-tariff barriers. As already noted, on 11 December 2001, China finally joined the WTO, after 15 years of negotiation. In a real sense, this was the prize awarded by the major developed nations to China in recognition of the reality that China was well on the way to becoming an open market economy. It also signaled that the first (planning) track of its dual-track economy was gradually, but inexorably, being shut down – first in the coastal provinces, to be followed in the rest of the country. The result of all this has been that the structure of industry has dramatically changed in the last 30 years: in the late 1970s, output was dominated by the state sector, primarily through large, state-owned enterprises; since then, the economy has seen the emergence of smaller companies, run through a range of ownership arrangements, including collectives, local government organizational umbrellas, domestic private enterprise and foreign shareholdings, including joint ventures. By 2001, the official state sector accounted for just one quarter of industrial output (EIU 2002). A similar change has occurred regarding foreign trade and foreign direct investment (FDI), both of which have seen exponential increases. Table 1 provides data for exports and imports from 1978–2007. China’s foreign trade turnover (exports plus imports) of $509.8 billion in 2001, ranked it as the sixth biggest trading nation in the world.

Table 1. China’s Exports and Imports 1978–2007 ($bn) Year

Exports

Imports

1978 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2007

9.8 18.1 27.4 62.1 148.8 249.2 266.2 325.6 438.2 539.3 762.0 1217.8

10.9 20.0 42.2 53.4 132.1 225.1 243.6 295.2 412.8 561.2 660.0 956.0

Source: China Statistical Yearbook 2008, table 17-3

china’s incomplete retreat

165

By comparison, in 1978, the country was in 32nd place, with total imports and exports of $20.7 billion. In 2001, China was the fourth largest exporter in the world, behind the US, Germany and Japan, with 5.8% of world exports. This figure reflects the largest increase in export share of any country between 1985 and 2000. There has been a gradual move into more sophisticated and higher value-added manufactured products as China’s main exports now comprise machinery, electrical equipment and accessories, recorders, video recorders, and accessories (32 percent of total); also important are the more traditional labor intensive textile materials and products (19 percent). A revealing indicator of China’s trading prowess is that, in 2002, China became the largest exporter of goods to Japan, overtaking the US for the first time since the end of the Second World War. Chinese exports to Japan amounted to $61.7 billion in 2002, compared with $57.6 billion from the US (EIU 2002). One of the reasons why China’s exports have risen so dramatically is the low value of the currency (the RMB yuan) which has, since 1996, been pegged to the US dollar at the rate of 8.3 yuan to the dollar. The International Monetary Fund has joined countries like the US and Japan in putting pressure on Beijing to allow the currency to float to enable other countries to compete more fairly. If allowed to float, the yuan would appreciate, making foreign goods more competitive relative to those from China. However, the Chinese government is determined to maintain the foreign exchange peg, particularly as the stability has brought record foreign exchange reserves, lifted exports, and boosted the national economy. Not many countries have resisted or are able to resist the IMF’s injunctions, but China is resolute in pushing through its own agenda. But its ability to do this stems from the vast trade and foreign exchange surpluses being generated and which insulate China from the coercive power of international financial institutions. Though China has undergone a thoroughgoing structural adjustment program, it is certainly not the sort the IMF imposes upon weaker economies. Imports have also risen sharply, pushed up by the furious pace of rising domestic demand for intermediary and manufactured products where machinery, electrical equipment and accessories, recorders, video recorders, and accessories account for 40 percent of the total. Like foreign trade, China has seen an extraordinary growth in inward FDI flows that match its increased importance in world trade. Foreign capital now plays a significant role in the Chinese economy

166

rumy hasan

and foreign firms are particularly dominant in the export sector, as many have established export-oriented manufacturing operations in coastal provinces. Foreign affiliates accounted for 23% of industrial value added in 2001, 18% of total tax revenues, and 48% of total exports. In some high-technology industries, foreign companies account for over 90% of exports. In 1980, inward FDI stocks were negligible, but since 1985 they have increased more than 60-fold, making China the largest recipient of FDI in Asia and also in the developing world (UNCTAD 2008). Tables 2a and 2b provide data on FDI inflows and stock. FDI inflows into China in 2001 regained their momentum after three years of stagnation, reaching $47 billion. This increase continued, raising the total of inward FDI to almost $61 billion: accession to the WTO certainly aided this rise. By 2004, inflows put it third behind the US and UK; a truly remarkable transformation.10 China has actively pursued knowledge transfer within FDI to aid its development. The government now openly advocates partnerships with foreign companies in sectors where development is held back

Table 2a. China’s inward FDI stock, 1980–2007 ($bn) 1980 0.1

1985 4.3

1990 20.7

1995 131.2

2000 193.3

2004 245.5

2007 327.1

Source: UNCTAD, World Investment Report 1999; 2005; 2008

Table 2b. China’s FDI Inflows, 1988–2007 ($bn) 1988–93 av. 1994 1995 1999 2000 2001 2002 2003 2004 2005 2007 8.9 33.8 35.8 40.3 40.7 46.9 52.7 53.5 60.6 72.4 83.5 Source: UNCTAD, World Investment Report 1999; 2005; 2008

10 In 2001, 66% of inward FDI was in the manufacturing sector, while 28% was in services. These proportions have remained relatively constant since 1997. Note that Hong Kong is the largest investor – but we have to be careful. For both trade and investment, foreign firms use Hong Kong as a base from which to invest in China. Moreover, there is a considerable element of ‘roundtripping’ where profits are made in China, booked in Hong Kong for tax reasons and then repatriated to China, showing as FDI.

china’s incomplete retreat

167

by a lack of technical or other expertise. For example, in 2000, the government announced that, in an effort to upgrade and transform the country’s aviation and aerospace industry, China would collaborate with foreign counterparts to expand its aviation industrial production. In addition to upgrading existing airports and building 36 new ones, the ultimate goal of this policy is for domestic aircraft producers to become aircraft suppliers and contractors to foreign companies. Foreign companies are also gradually being allowed into the key service sector industries, such as finance and telecommunications. China has been traditionally reluctant to allow foreign entrants into these markets. As a corollary to the increased integration with foreign capital, China has embarked upon significantly expanding its financial sector. The oil that lubricates market capitalism, financial capital, has become just as desirable as the natural variety. Consequently, international banks and financial institutions have been encouraged to open up branches in China – again, with the large coastal cities becoming the major poles of attraction. By July 2002, there were 167 foreign banking affiliates in China and 233 representative offices of foreign banks. It seems that Shanghai is well on the way to joining the elite club of the major international financial centres. Despite various programs to encourage foreign investment to the less attractive provinces, however, there remains an acute difference between coastal and interior provinces. Moreover, the provincial disparities have intensified and provoked the state to take measures aimed at redressing the balance, such as the Ninth and Tenth (the current) Five Year Plans, which encourage investment into the west and middle of China. So far, this has not yielded much success. The impact of FDI in China’s coastal provinces has been of such magnitude as to provide a significant input into debates concerning FDI in developing countries. It is undoubtedly the case that FDI has resulted in a major net injection of savings, investment, and hard currency, more advanced technology, machinery, production methods, new skills, the raising of skills through training, and marketing expertise. Moreover, given that a good deal of such transfers have been based upon joint ventures and strategic alliances, inevitably there will have been significant ‘spillover’ and linkage effects on domestic enterprises. It is precisely for these reasons that the Chinese state has consistently striven for higher levels of FDI as if it had discovered the magic bullet for development.

168

rumy hasan

The impact on the economy from the opening up has been the achievement of historically very high rates of growth. Table 3 gives the annual growth rate from 1952–1978 and from 1979–2008. Whereas in pre-reform period, 1952–78, the average annual growth rate was 6.8 percent, between 1979–2008 it was a remarkable 9.8 percent. Only South Korea in the latter period has matched these levels of growth. Restructuring of State and Capital: A Tale of Two Chinas It is indubitably the case that China’s economic transformation over the past quarter of a century has been profound. Yet it is also the case that this has been conducted by a ruthless and repressive regime, acting knowingly or unknowingly on a combination of Hobbesian and Nietzschean assumptions of human nature. There is, however, a debate regarding the accuracy of the growth figures given the poor state of statistics collection, and also the wish by the authorities to exaggerate them. For example Rawski (2001) has argued that the official growth rates are greatly exaggerated – between two and three times the actual growth rate. However, Rawski’s calculations have themselves been severely criticized (for a summary, see Berger, 2003). F. Wu (2003)

Table 3. Index of GDP 1952–2007 (1952=100) 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 100 116 120 127 142 147 168 176 176 153 147 157 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 175 192 203 197 193 210 229 236 240 248 250 259 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 257 265 277 285 293 298 307 318 333 347 356 368 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 379 383 387 396 410 424 437 448 458 469 477 484 2000 2001 2002 2003 2004 2005 2006 2007 2008 492 499 507 517 527 537 549 561 570 Note: average growth per annum for 1952–1978 = 6.8%; for 1979–2008 = 9.8% Source: Adapted from China Statistical Yearbook 2002, table 3–3, p. 53; and China Statistical Yearbook 2008, table 2–4; data for 2008 from Xinhuanet (2009)

china’s incomplete retreat

169

outlines the weaknesses of China’s statistical system though argues that it is continually improving. Maddison (1998:appendix C) discusses his modifications of the official data – also arguing that they are exaggerated. Hence he revises downwards GDP estimates for 1978–95 to 7.5 percent, significantly lower than the official rate of 9.9 percent for the same period. These are probably nearer to the truth than Rawski’s figures. Nonetheless, even if we reduce the annual growth rate by, say, 2 or 3 percent per annum (to 7–8 percent p.a), the resultant rate remains astonishingly high (more than twice the rate of the major developed countries) – and it is this that leads Khan and Riskin (2001:3) to note that “[n]ever before in the course of human history has a quadrupling of per capita GDP of more than one-fifth of Humankind occurred over such a short period.”11 Consequently, the impact of the transformation on the mass of the population has been real, what Nolan (1995:15) describes as an “explosion in the provision of a wide range of human rights,” including improvements in health, education, employment opportunities (and the right to migrate), food provision, clothing, housing, and cultural products; indeed, the array of goods and services denied to people under the ‘pure’ communist system. Concomitantly, the numbers living in poverty have dramatically fallen. But this is only half the picture. First, China has an appalling human rights record: there is, of course, no universal suffrage, and the oneparty state metes out punishment ruthlessly, as is highlighted by the thousands of executions every year (as attested by reports of human rights organizations such as Amnesty International). Second, income inequality has increased sharply as economic improvements have been most felt in the booming coastal provinces (Khan and Riskin 2001). Indeed, the variations between the coastal and interior provinces have hugely widened (but also between the Southern and far North East provinces). The UN Development Programme calculates that the Human Development Index is the highest in the former and lowest in the latter.12 Thus, the top eight provinces are (the top three are, in fact, 11 What is, however, invariably neglected in discussions of growth rates is that accounting practices do not consider the environmental destruction debt that has accrued in China. 12 The Human Development Index (HDI) attempts to overcome the narrowness of purely income per capita figures by encompassing two further elements (alongside per capita income): life expectancy and educational attainment (combination of literacy rate and school enrolment).

170

rumy hasan

provincial level cities): Shanghai, Beijing, Tianjin, Guangdong, Liaoning, Zhejiang, Jiangsu, and Fujian, whilst the bottom 8 are: Jiangxi, Sichuan, Ningxia, Yunnan, Gansu, Qinghai, Guizhou, and Tibet (UNDP 2002;table A1, p. A3). Whereas the per capita GDP of the poorest provinces is approximately $2,000 (in 1999 PPP$), it is over $5,000 for the richest (coastal) provinces (with Shanghai and Beijing being by far the richest at $15,000 and $9,000 respectively). Poverty is still rife and 18.5 percent of the population live below the international poverty line of $1 a day in 1998.13 The situation in the rural areas is still considerably worse where eight percent of the rural population live below the (much more generous) national poverty line, compared with less than two percent of the urban population (World Bank 2002:64, table 2.6). Moreover, 50 million people live in absolute poverty in rural areas, with an annual income of $75, and China accounts for one-quarter of the 900 million poor people in Asia. Most provinces (including coastal) have both rural and urban poor (UNDP 2002:45). Corruption is rampant, both in the Party/state bureaucracy and in the private sector in what are known as ‘economic crimes’ (smuggling, tax evasion, bribery, kickbacks etc. – White 1993:80, 179). Broad swathes of migrant rural workers arrive in urban centers with few resources in search of work, but are denied an array of rights, and designated as outcasts by the ‘natives’ in much the way that Mexican workers are in the US. But life for workers in the coastal provinces is far from rosy: indeed, with much justification, Chan describes Chinese workers as being ‘under assault’ (Chan 2003). Conditions are poor, giving rise to appalling workplace health and safety conditions, not alleviated by independent trade unions which are absent. Though the economy has been opened up, the state has nevertheless kept an active role. Indeed, rather than that of Stalinist economies of the former Eastern bloc, the economic path taken by China has been more akin to the ‘developmental state’ model of Japan and South Korea, and other East Asian countries where the state has guided the economy, providing protection, export assistance, financial aid, and conducted industrial policies. Hence, all foreign investment has required

13 This is actually $1.08 a day at 1993 international prices, adjusted for purchasing power parity.

china’s incomplete retreat

171

state approval, whilst export promotion was encouraged by the state and assistance provided for exporting enterprises. As we have seen, foreign direct investment has risen rapidly and joint ventures, which provided a significant amount of FDI, altered the nature of state owned enterprise (SOEs) as they became ‘corporatized,’ that is, though still under state ownership, in reality they were transformed into independent commercial entities. Indeed, corporatization was a prelude to privatization in the East European economies in the 1990s, but in China that final jump has yet to be taken. But pressures will inevitably be mounting from the managers of the successful SOEs which may prove impossible for the center to resist. By the early 1990s, China was well on the way to becoming the ‘workshop of the world.’ It had the highest output of black and white TVs, fridges, washing machines, fans, and irons in the world. Moreover, unlike in the former Soviet Union that had also manufactured large amounts of low-tech products, quality was sufficiently good to enable exports to developed countries. In the post-reform period, notwithstanding the booming economy, the harsh realities of the market economy have meant that, without independent unions, workers have been left extremely vulnerable. The hukou system of household registration confers rights to ‘resident’ urban workers so that they at least have access to basic resources (health, schooling, welfare etc.) even if they are very rudimentary. But such rights are denied to those deemed as ‘migrant’ workers (from rural areas) for whom life in the urban centres can be truly oppressive. In a very real sense, the factories of coastal China are the modern equivalent of the ‘satanic mills’ of 18th and 19th century Britain. However, like their British counterparts of yesteryear, Chinese workers are not taking their exploitation and abuse lying down – conflicts, strikes, and general resistance regularly take place and will undoubtedly continue to do so, to perhaps more intensive levels (see Chan 2003; Wedeman 2006). However, unlike some labor strikes in Western Europe in particular, virtually all labor protests in China in the past twenty years have been workplace focused, that is, localized. The command economy was inefficient, static, and had become increasingly stagnant, but within it, the Great Leap Forward aside, workers could work at a relatively leisurely pace because incentives for hard work in the hope of better living standards did not exist. The returns to workers were modest and provided no more than their basic

172

rumy hasan

needs. In contrast, the marketized economy has produced a plethora of goods but, in so doing, subjected those who produced them to crushingly long and exhausting hours of work, often under working conditions that pay scant regard for health and safety. Political Implications of the Retreat of State Capitalism The four modernizations saw the erosion of the shibboleth of 100 percent state ownership as private property rights were slowly but systematically extended. Managers of state property were encouraged – via market-oriented incentives – to behave in the manner of private owners. Hence, the material supply system that formed the backbone of the command economy was loosened so that SOEs themselves could choose their inputs, the type of output, the volume produced (subject to plan requirements), and were allowed to invest a proportion of their profits back into their enterprises (Nolan 1995:212). Though it was not systematically planned, there has been a secular and gradual retreat of the state from direct economic management. The drive to restructure has been incessant – with increasingly laissez faire economic policies in the coastal provinces, and economic relaxation in the interior provinces. The point of no return was probably reached in the late 1980s – and, just as in the former Eastern bloc, it is safe to say that there is no going back to the old state capitalist command economy. What has, therefore, become the raison d’être of the state? Clearly, the project of national accumulation by the state to develop an independent autarkic economy with a powerful military sector that could enable it to protect itself from external (but also internal) threats, no longer applies. The welfare of the population beyond the basics was never a high priority so in this regard the CCP has recognized its inability or incapacity to achieve this and asks the people to fend more and more for themselves. This will naturally have political implications. If the state seeks for people to make their own living, then people may demand that it also keeps its nose out of their lives, that is, eases off the repressive pedal and grants far more civil liberties and political rights, including the right to form political parties. This might sound absurd at present, but the collapse of CP rule in the former Eastern bloc provides a sober reminder as to how quickly seemingly rock-solid

china’s incomplete retreat

173

regimes can be removed.14 Sooner or later, therefore, there will come the point, as it did in 1989, where the very role of the CCP is robustly called into question. And when this occurs, there may be the Chinese equivalents of General Jaruzelski and Boris Yeltsin who, having seen the writing on the wall, help to switch off the life-support mechanism of the CCP. Meanwhile, this key driver of China’s erstwhile state capitalist economy is itself likely to undergo continual changes and, in the process, may lose the will and determination to act with the ruthless discipline and unity that has kept it in power for over six decades. The nature of competition confronting the state has changed. In the pre-reform period, competitive accumulation was driven by the CCP at the national level and centered on, as we have noted, the military and heavy industrial sectors as external competition took a military form. Hence, also, in a backward agrarian economy, there was the neglect of the light industrial sectors. During the post-1978 period, the dynamo of competitive accumulation has shifted more to the micro (enterprise) level via the medium of the market, globally, and, increasingly, internally. This is a function of where Chinese enterprises are most competitive in international markets and these have hitherto been light manufacturing and consumer goods sectors. Concomitantly, there has been a shift away from the military industrial complex by the systematic transfer of resources to the civilian sector, that is, the widespread conversion of military industries to civilian use. This key issue has been rather neglected, but the important point is that it has been conducted with the consent of the military establishment. At first (1978–82), this was done through ‘exhortation’ rather than central commands but, thereafter, a sustained push was launched by the central government so that the percentage of total defence industry output devoted to civilian markets rose from 10 percent in 1979 to over 65 percent in 1990. In other words, very large numbers of hitherto military enterprises became largely engaged in civilian production – with the inevitable consequence of a sharp fall in military production (Berthelemy and Deger 1995:11–12). This demonstrates

14 Interestingly, from the early 1980s onwards, the Communist Party of China commissioned systematic studies of developments in Eastern/Central Europe and in the then-Soviet Union to see how to avoid problems faced by ruling parties in those regions. I argue that acquiring and acting on the knowledge gained has contributed to the Chinese rulers’ retaining their grasp on power.

174

rumy hasan

that the CCP leadership felt little threat from the military establishment that had, in any case (except, of course, in 1989) stayed clear of direct political involvement. Remarkably, many defence SOEs have actively sought collaboration with foreign companies and formed joint ventures with them on conversion projects. The result has been a gradual decline in defence expenditure as a percentage of GDP: from 7.9 percent in 1985 (with 3.9 million in the armed forces) to 5.3 percent in 2000 (down to 2.8 million in the armed forces). But given the booming economy, the absolute increase in the official defence budget has been substantial, increasing from $29 bn in 1985 to $41 bn in 2000 (in constant 1999$)(IISS 2001;table 37, p. 301). The official defence budget increased sharply in 2000: to Y141 bn from Y120 bn in 1999 (that is, by nearly 18 percent). Chang (2001:37–38) argues that this sharp growth stems from the hard line taken by the PLA over Taiwan in recent years but that the real increase is not known because “China hides most of its defence outlays.”15 The dispute over the geo-politically important Spratly islands (sitting above potentially vast reserves of oil and gas) has also been a source of friction between China, Taiwan, and the ASEAN countries of Brunei, Malaysia, the Philippines, and Vietnam. Although China entered a truce with the latter four in October 2002, Taiwan was not a signatory to this. The threat of a conflagration over the Spratlys, therefore, still hangs over this region which, in turn, provides a perpetually useful pretext for boosting military expenditure. That said, Taiwan has not hitherto shown any inclination to take action against any of the ASEAN countries currently occupying or claiming any of the disputed islands, islets, atolls and rocks in the South China Sea. Economic devolvement and the unhinging of the coastal provinces from the central plan, in combination with the relative decline of Beijing, is creating a centrifugal dynamic as each coastal province (and constituent elements) attempt to take control – at the direct expense of the center. In fact, this is an expression of Maoist ‘self reliance’ in a different guise: it is the attempt at economic self rule whilst rejecting 15 The reputable IISS (International Institute for Strategic Studies) agrees with this assertion: “… the real size of China’s defence spending remains a mystery. It is generally believed that the official budget accounts for little more than personnel and operational costs. Other significant items including procurement, military research and development and pensions for retired personnel are funded from elsewhere in the national budget” (IISS 2001:177). Note that the 5.3per cent of GDP is the IISS’s estimate of real military spending in 2000.

china’s incomplete retreat

175

autarkic self reliance. In other words, with the economic imperative of the plan largely removed, political power is increasingly gravitating to the provincial governments – so much so that only a military threat can lead to the central government taking full control. But this is highly unlikely, as the Chinese government will not want to crush the goose laying the golden eggs. Inevitably, this will reduce the reach of the CCP, central bureaucracy, and state. So, bureaucratic state capitalism is being transformed into provincial market capitalism – which is a markedly different phenomenon to decentralized state capitalism. Though there is no sign of this as yet, in the not-too-distant future certain key provinces (such as Guangdong, Jiangsu, Fujian) may feel sufficiently confident and independent to relax the political grip of the CCP – as a means of further reducing the power of the center, but also in response to struggles and demands – by encouraging and even legalizing increased political and workers’ rights, reasoning that the center lacks the power and will to intervene. Such a scenario has not yet materialized but the trend of events points to this direction. In fact, a flavor of what is to come is provided by the case of Shenzhen (bordering on Hong Kong in Guangdong province) where political reforms have seen the separation of the CCP, the executive government, and local legislature. In other words – and uniquely, there has been an element of curtailment of the party’s powers, even though it remains in charge of directing overall policy. This provides an added signal to foreign investors that local governments and legislature will ensure the protection of property rights – free from interference by the central government. Indubitably, however, local governments heed the concerns of investors much more than that of their populations and so are not likely to agitate for increased democratic rights of the latter, or of improving workers’ rights, but rather will focus on ensuring that the commercial interests of investors are protected and enhanced. Indeed, the generally oppressive conditions for workers have occurred with the full assent of local government with little concern from the center. But the loosening of the party political straitjacket is significant in that it also sends a signal to workers and the population at large that monolithic control may be coming to an end. Consequently, workers have been resisting these priorities and will continue to do so; their agitation may be augmented by protests in the home countries of the transnationals against sweatshop conditions in foreign affiliates. And these may, in turn, force the provincial governments to grant better political rights and to put pressure

176

rumy hasan

on enterprises to assent to improved employment (including the establishment of trade unions) rights and guarantees. There is thus the emergence of a ‘dual track’ polity in the manner of the economy whereby central structures of power become increasingly devolved to provincial, and provincial authorities, in consequence, become weakened. One can think of China’s trajectory post-1978 as being equivalent to a Chinese perestroika without the glasnost; that is, economic liberalization without increased political rights and freedoms. Does this suggest that China’s ‘conservatives’ have been proved correct when they argue that a tight rein on political power is a sine qua non to enable economic reforms to work? They can cite the chaotic example of the Eastern bloc as providing ample evidence when this advice is ignored. As persuasive as it might seem, the answer must be no. Political liberalization in the Eastern bloc stemmed from the recognition by the regimes that, without it, there was a real risk of popular discontent reaching revolutionary proportions as it had done in Poland in 1956, 1970, 1976, and above all, in 1980. Moreover, the post-transition crisis of the 1990s to the present day was not a function of economic reforms being scuppered because of the chaos ensuing from increased political liberalization, but rather the problematic nature of the reforms themselves. What the example of China in fact shows is that, to some extent, it is possible for an authoritarian regime to buy off demands for political rights by consistently raising the living standards of the mass of the population. But it is also the case that an increase in such demands is also a consequence of economic advancement, so that sooner or later this trade-off is likely to suffer diminishing returns, usually in conjunction with specific grievances by sections of the population that generate pressures for change. It is precisely this that helps explain the Spring 1989 uprising by workers and students in Beijing and, without moves towards a Chinese glasnost, such a scenario can certainly recur. A fear of this may provoke elements of the leadership to argue for the granting of meaningful reforms; this could certainly provoke a power struggle at the top, which may, in turn, trigger popular protests. The argument here is that given the extent of economic restructuring since the beginning of the reform period, it is inconceivable that there will not be significant political implications. Bureaucratic state capitalism requires authoritarian central control whereas devolved market capitalism does not. This does not imply that market capitalism automatically generates democratic pressures – on the contrary,

china’s incomplete retreat

177

the bulk of human history of the past 500 years combined with the overwhelming evidence of today, contradicts this thesis. But a fracturing of central economic power, in combination with strong economic advancement and the raising of living standards can generate an array of pressures for political change from the various re-constituted forces in society. In other words, economic restructuring leads to class restructuring which generates pressure for political restructuring. If this is correct, could the new, burgeoning, private bourgeoisie of the coastal provinces lead to the struggle for not only rudimentary democratic reform but for state power itself? There is no sign of this as yet – moreover, the new bourgeoisie has not yet coalesced into formidable organizations and institutions that can vigorously push for its class interests to such an extent (Pearson 1997:ch. 4). Nonetheless, theoretically, this is feasible, but for the foreseeable future, as long as the reform process continues in its present direction, support can be expected from private capital for both the CCP and state. What about workers and farmers – including agricultural workers? As of 1955, perhaps 15% of Chinese agricultural workers were in Agricultural Producers Cooperatives (sometimes called ‘communes’). These have largely supported the reforms – and gained much from them, though tensions remain. One possible source of conflict is the desire and demand for land ownership. But China can look at the example of Poland under Communist Party rule where agriculture largely remained in private ownership (albeit subject to the central plan) and where farmers remained in close alliance with the ruling CP, a partnership that continued in the post-1989 period between the Peasants Party and the reformed CP (Social Democratic Party). Moreover, in time, the move to private land ownership is a distinct possibility. Only a serious crisis in agriculture with precipitous falls in prices, or the unlikely event of cheap agricultural imports flooding the domestic market, could pose a real threat to the state from the agriculture sector. In the case of workers, state-owned enterprises of interior provinces rely on the center for jobs and associated social services. The fate of such workers presents one of the most pressing questions: how rapidly to restructure and marketize? Should rapid marketization lead to widespread closures and redundancies, SOE workers could certainly pose a major threat. That is why the center has hitherto been pursuing an extremely tentative approach; but signs are that, after WTO membership, reforms of SOEs are likely to accelerate. Without a sufficient social

178

rumy hasan

safety net, opposition will mount, and possibly in anticipation of this, the center is trying to off-load responsibility to the provincial governments. But this may not be sufficient: indeed, the restructuring of SOEs, for which there are no easy solutions, will remain a big headache for both state and provinces. Workers in the non-state sector in coastal provinces, despite job expansion and increased living standards, are likely to intensify the challenge to sweatshop conditions that are so prevalent – so that the resistance and struggle here becomes the ‘classic’ type between workers and private capitalists (be they domestic or foreign). Here the center will devolve to provincial governments to arbitrate and end any such conflicts. However, the continual denial of an array of basic democratic rights and rampant corruption, that have become so embedded in the coastal provinces, imply a loss of legitimacy of CCP rule. Yet, there is no sign that the Chinese polity is about to disintegrate as the Soviet Union did. What holds the party-state together is the combination of a growing economy and repression – and a CCP convinced that to relinquish a tight rein over power would be to send the economy over the precipice. Furthermore, for many Chinese who can remember endless political campaigns (or have heard or read about them), a fear of ‘chaos’ also lends stability to the political system and to the advantage of the ruling Communist Party. Perhaps in the event of an economic crisis, and the coalescing of an effective opposition, sections of the leadership might well resort to a Milosevic-type nationalism – and accordingly use the internal recalcitrant of Tibet or Uighur nationalism or the external bogeymen of Taiwan and Japan to browbeat it in the name of ‘national unity.’

Conclusion The logic of the Stalinist command economy was one where the state required a tight centralized control over power in order to maintain a tight grip over the economy via centralized directives. In China, the state has willingly loosened its grip over the economy and devolved much control to the provincial governments and enterprises (including private enterprises). In so doing, it has allowed the creation of an ever expanding and potentially threatening oppositional bloc, above all in the coastal provinces where this devolution has been greatest. But it has retained a tight grip over central power. A question of great

china’s incomplete retreat

179

import is for how long, and to what extent, can it retain this absolute grip on power whilst gradually relinquishing key economic levers. The dual track economy, in the context of external military competition, suggested a hybrid state- and market-capitalist formation. However, the gradual dissolution of the planning track has necessarily curtailed the power of the central bureaucracy; but at the same time, the party and military structures remain intact. This suggests that though China has veered away from bureaucratic state capitalism, it has not completely abandoned it. Moreover, to the extent that China is indeed becoming divided between the developed, marketized, coastal provinces, and less-developed, still largely statized, Central and Western provinces, it becomes rather futile to describe China as a oneterm epithet. In this sense, China is no longer a state capitalist economy. Moreover, the imperative of external military competition no longer provides the central drive for industrial development. In Marxian terminology, the law of value is no longer transmitted via military competition but rather from values as reflected in global market prices. Indubitably, the post-1978 Chinese economy is proving a far more powerful model for other countries to emulate than the postrevolutionary China of Mao. The demonstration effect of FDI cascading into China has certainly acted as a factor in convincing other East Asian countries (and developing and transition countries generally) to also attempt to ‘open up for business’ and deregulate in order to induce FDI. But given the powerful lure of China, other developing countries are finding it increasingly difficult to succeed in this. The downside of this is that China is now enormously reliant on foreign firms for its exports and extremely vulnerable to a sudden contraction of FDI inflows. Stiff capital controls can insulate against capital flight but cannot prevent closure of FDI operations. With this caveat in mind, it is nevertheless the case that there is no sign (see tables 2a and 2b) of any significant contraction in FDI to China. China provides a stark example of all the contradictions of capitalism in an especially acute form: positive achievements intertwined with enormous hardships, rising inequality, and injustices. Though the 1949 revolution was undoubtedly a major advance, the system under Mao did not gear itself to the widening and deepening of individual and societal development; on the contrary, it quickly transformed into a callous, repressive polity. The post-1978 economy, so much more productive and economically dynamic and without the disasters of the

180

rumy hasan

Great Leap Forward and the Cultural Revolution that led to the loss of millions of lives has, nonetheless, also been callous to millions. With the relentless drive to raise productivity, the switch to intensive methods has seen the accumulation process being shared with domestic private and foreign capital. The result, as we have seen, has been stark: China has certainly become dynamic but with the competitive advantage of ‘sweatshop capitalism.’ The argument of this chapter is that the profound restructuring of state and capital since 1978 has led to the reconfiguration of classes with inevitable political ramifications. The forecast is that resistance and conflicts are likely to ensue in certain key respects: in particular, between the state and provincial governments – especially those of the coastal provinces; between stateowned enterprises and both provincial and central governments; and between workers against state, collective, and private enterprises, provincial governments, and the state in the booming coastal provinces. The precise trajectory of this is impossible to predict but its effect may lead to as profound a change on the nature of the polity as has been made on the nature of the economy. The prospect of a tranquil evolution seems unlikely. References Berger, Yakov. 2003. “On the fidelity of China’s economic growth and the ‘Chinese threat.’ ” Far Eastern Affairs 311: 46–63. Berthelemy, Jean Claude and Saadet Deger. 1995. Conversion of Military Industries in China. OECD: Paris. Bramall, Chris. 1990. “The Wenzhou miracle: an assessment.” In Peter Nolan and Fureng Dong eds Market Forces in China: Competition and Small Business – The Wenzhou Debate, Zed Books: London and New Jersey. Bukharin, Nikolai. 1972 [1915]. Imperialism and World Economy. Merlin: London. Chan, Anita. 2003. China’s Workers Under Assault: the exploitation of Labor in a Globalizing Economy. M.E. Sharpe: Armonk and London. Chang, Gordon. 2001. The Coming Collapse of China. Random House: New York. Chang, Jung and Jon Halliday. 2005. Mao: The Unknown Story. London: Jonathan Cape. China Statistical Yearbook 2002. National Bureau of Statistics of China: Beijing. China Statistical Yearbook 2005. National Bureau of Statistics of China: Beijing. China Statistical Yearbook 2008. National Bureau of Statistics of China: Beijing, http://www.stats.gov.cn/tjsj/ndsj/2008/indexeh.htm. Cliff, Tony. 1988. State Capitalism in Russia. Bookmarks: London. Dent, Christopher. 1999. The European Union and East Asia: an Economic Relationship. Routledge: London. Economist Intelligence Unit 2002. Country Report on China. September. EIU: London. Guldin, Gregory. 1995. “Toward a Greater Guangdong: Hong Kong’s Sociocultural Impact on the Pearl River Delta and Beyond.” Pp. 89–118 in Reginald Yin-Wang

china’s incomplete retreat

181

Kwok and Alvin Y. So eds., The Hong Kong-Guangdong Link: Partnership in Flux. M.E. Sharpe: Armonk. Harris, Nigel. 1978. The Mandate of Heaven: Marx and Mao in Modern China. Quartet Books: London. —— . 2003. The Return of Cosmopolitan Capital: Globalization, the State, and War. I.B. Taurus: London and New York. Haynes, Michael and Rumy Husan. 2003. A Century of State Murder? Death and Policy in Twentieth Century Russia. Pluto Press: London. Hendrische, Hans. 1999. “Provinces in competition: region, identity, and cultural construction.” Pp. 1–25 in H. Hendrische and Feng Chongyi eds., The Political Economy of China’s Provinces: Comparative and Competitive Advantage. Routledge: London. The International Institute for Strategic Studies. 2001. The Military Balance 2001–2002. Oxford University Press for IISS: Oxford. Kaser, Michael. 1987. “One economy, two systems: parallels between Soviet and Chinese reform.” International Affairs 633: 395–412. Khan, Azizur and Carl Riskin. 2001. Inequality and Poverty in China in the Age of Globalization. Oxford University Press: New York. Kidron, Michael. 1968. Western Capitalism Since the War. Penguin: Harmondsworth. Kuan H-c. 1995. “Hong Kong and Guangdong: Greater China or Greater Hong Kong?” Pp. 207–232 in Dieter Cassel and Carsten Hermann-Pillath eds., The East, the West, and China’s Growth: Challenge and Response. Nomos Verlagsgesellschaft: BadenBaden. Lange, Okar. 1957. “Role of Planning in Socialist Economy.” Pp. 16–30 in Oskar Lange ed. 1959. Problems of Political Economy of Socialism. Warsaw: People’s Publishing House. Maddison, Angus. 1998. Chinese Economic Performance in the Long Run. OECD: Paris. Mao, Zedong. 1977 [1953]. “On state capitalism.” Selected Works V. Foreign Languages Press: Peking. —— . 1977 [1960]. “Notes on the texts.” A Critique of Soviet Economics. Translated from Chinese by Moss Roberts. Monthly Review Press: New York and London. Naughton, Barry. 1994. “Chinese institutional innovation and privatization from below.” The American Economic Review 84(2): 266–270. Nolan, Peter. 1995. China’s Rise, Russia’s Fall: Politics, Economics and Planning in the Transition from Stalinism. MacMillan and St. Martin’s Press: Basingstoke and New York. Nolan, Peter and Fureng Dong eds. 1990. Market Forces in China, Competition and Small Business: The Wenzhou Debate. Zed Books: London and New Jersey. Pearson, Margaret. 1997. China’s New Business Elite: the Political Consequences of Economic Reform. University of California Press: Berkeley. Pollard, Vincent. 2001. “State Capitalism.” In Jonathan Michie ed, Reader’s Guide to the Social Sciences, vol.2. Fitzroy Dearborn Publishers: London. Rawski, Thomas. 2001. “What is happening to China’s GDP statistics?” China Economic Review 124: 347–354. Reardon, Lawrence C. 2002. The Reluctant Dragon: Crisis Cycles in Chinese Foreign Economic Policy. Studies of the East Asian Institute, Seattle and London: University of Washington Press. Riskin, Carl. 1987. China’s Political Economy: the Quest for Development since 1949. Oxford University Press: Oxford. Sun, Laixiang. 2000. “Anticipatory ownership reform driven by competition: China’s township-village and private enterprises in the 1990s.” Comparative Economic Studies XLII 3: 49–75. UNCTAD World Investment Report for 1999, 2005, 2008. UN: New York and Geneva. UNCTAD. 2005. World Investment Report. UN: New York and Geneva.

182

rumy hasan

UNDP. 2002. China Human Development 2002. URL accessed 18th October 2007. http://www.unchina.org/undp/documents/HDR/UNDP%20China%20 National%20Human%20Development%20Report%202002.htm. Wedeman, Andrew. 2006. “Strategic repression and regime stability in China’s peaceful development.” Pp. 89–116 in Sujian Guo ed., China’s Peaceful Rise in the 21st Century: Domestic and International Conditions. Ashgate: London. White, Gordon. 1993. Riding the Tiger: the Politics of Economic Reform in Post-Mao China. Stanford University Press: Stanford. World Bank. 2001. World Development Indicators 2001. World Bank: Washington. Wu, Friedrich. 2003. “Chinese economic statistics: caveat emptor!” Post Communist Economies 151: 127–145. Wu, Harry. 2002. “Industrial output and labour productivity in China, 1949–94: a reassessment.” Pp. 82–101 in Angus Maddison, D.S. Prasada Rao, and William Shepherd, The Asian Economies in the Twentieth Century. Edward Elgar: Cheltenham. Xinhuanet. 2003. “Decision on improvement of socialist market economic system issued.” URL accessed 18th October 2007 www.chinaview.cn. —— . 2009. “China’s GDP grows by seven-year low of 9% in 2008.” http://news .xinhuanet.com/english/2009-01/22/content_10700833.htm. Zhao, Ziyang. 1982. China’s Economy and Development Principles. Foreign Languages Press: Beijing.

CHAPTER NINE

CHINESE ‘DEVELOP THE WEST’ CAMPAIGNS AND THEIR ENVIRONMENTAL IMPACTS: THE POST-SOCIALIST CONDITION IN CHINA* Yuehtsen Juliette Chung Current ‘Develop the West’ campaigns were launched by the Chinese government in 1999, embraced by regional governments, and pursued by Hong Kong entrepreneurs who see the campaigns as a gold mine. The western region comprises Xinjiang, Tibet, Shaanxi, Ningxia, Gansu, Qinghai, Inner Mongolia, Sichuan, Guizhou, Yunan, Guangxi and Chongqing City; it is home to 86% of China’s national minorities, makes up 71% of the country’s land area and houses 28% of its population. From State projects such as a railway linking Tibet and Qinghai, a pipeline to transfer natural gas from Xinjiang to Shanghai and a project to divert water from the Yangtze River to the parched north, Gansu received 15.6 billion yuan (approximately US$2 billion in 1999), and has been selected by the central government as one of three production bases for stainless steel. During 1999–2008, the Chinese government poured nearly 1.74 trillion yuan into 102 major projects in the western region. The annual growth rate in investment in fixed assets is more than 20 percent.1 Most of the companies in the western region are state-owned enterprises. And as late as 2007, foreign direct investment in the western region only constituted 3% of the total for all of China.2 The ‘Develop the West’ campaigns have been predominantly

* An earlier version was presented at one of the state capitalism conference panels leading up this book (Chung 2004). I would like to thank Vincent K. Pollard for his encouragement and strenuous efforts to make possible this publication. 1 See the news announcement at China Daily. Online edition. http://www.chinadaily.com.cn/bizchina/2009-07/14/content_8424912.htm. Accessed August 7, 2009. The Chinese government has been investing stably and annually the same amount of capital in the coastal region in recent years (Wang Tao 2004). 2 See the statement of Wang Jinxiang, Vice-director of National Development and Reform Commission in 2007 at Sina News Net. http://finance.sina.com.cn/g/2007 0302/10093371339.shtml. Accessed August 11, 2009.

184

yuehtsen juliette chung

financed by the state capital. Consequently, the ‘Develop the West’ campaigns embody state-dominated economic planning and correspond to my understanding of state capitalism, even though the Chinese state persistently refers to itself as socialist.3 According to the 2009 annual report, the GDP growth rate in the western region has been 11.42% from 1998 to 2008, higher than the national average (9.64%). Within the region, the gap of per capita net income of rural households between the highest, Xinjiang, and the lowest, Gansu, was 854 yuan in 2009 (Yao Huiqin and Ren Zongzhe 2009).4 Gansu and other western provinces have failed to implement comprehensive environmental protection measures and monitoring plans and are therefore experiencing environmental degradation similar to that experienced in other developed and developing countries. Most problematically, the local drive to rapidly catch up with the eastern seaboard has led local governments to attract more investment by compromising critical environmental standards in heavy polluting industries that have become obsolete in developed regions of China and in other countries. This chapter evolves from my previous work, and reflects my intense concern regarding the issues surrounding Chinese modernization and quality of life for the majority of the Chinese population. Chinese governments have been ‘developing the West’ since the Qing Dynasty and the Republican eras for at least 250 years. To some extent, problems of the last thirty years, since the late 1970s, can be understood in light of earlier developments and their historicity. By reflecting on these earlier ‘Develop the West’ campaigns, this chapter explores four issues: 1) whether economic development will reduce ethnic tensions; 2) modernization as a process of recolonization and incessant exploitation of 3 Rumy Hasan understands state capitalism in the external competition of a stateowned command economy and sees China as a state capitalism operating a centralized, authoritarian command economy like the former Soviet Union from 1949 (Hasan 2008). For Hasan, China’s development from the 1978 economic reforms to the current economic boom has marked a gradual retreat of state control over the economy and the adoption of a dual track of state and market approaches. Meanwhile, Satya Gabriel and colleagues understand Chinese state capitalism from the basic fact that whereas Chinese workers produce surplus, the State Council has been the sole apparatus appropriating and distributing national surplus (Gabriel, Resnick and Wolff 2008). Both definitions illuminate my understanding of Chinese state capitalism. 4 The Chinese Statistics Yearbook 2009 was not released until December 2009; however, according to an earlier news report, the rural net income was 3183 yuan in Xinjiang and 2329 yuan in Gansu, respectively, in 2007 (Chinese Statistics Yearbook 2008:340).

the post-socialist condition in china

185

resources, 3) the lack of coordination and equal distribution of resources between the central and local governments, and 4) whether the development campaigns with the claimed Chinese characteristics could avoid the same path. In the same way that economists always study the distribution of costs and effects, this chapter measures ‘governance,’ or, in the conventional Chinese term, ‘statecraft,’ through the lens of ‘economics.’ Taking this approach, I will recover the classical Chinese meaning of husbanding of resources and adroit management of their circulation that conforms to the conventional sense of economy in the Chinese translation, jingji (jingshi jimin, literally ‘statecraft to serve the people’). A classical approach to statecraft as such does not need to employ faux ‘socialism with Chinese characteristics’ to legitimize the state-planned capitalist development, nor does it have to promote the gradient development theory by ignoring inequality and social grievances.5 Since China is a latecomer in the world of development, it could gain insight from the whole array of success and failure experienced by other developing and developed countries. This approach is not unique. Scholars of science and society such as Brian Wynne and Ulrich Beck have used the term ‘reflexive modernity’ to depict the developmental process of European experiences (Beck 1992; Wynne 1996). Wynne and Beck have been working on environmental risks within the globalization system as a departure point for critical reflection on the state of science or social science and dominant ‘social paradigms.’ They argue that it is possible for us to move towards seeing reflexive modernization as for the most part propelled by blind social processes towards a risk society automatically producing reflexivity and reflection. They re-conceptualize environmental crisis as a set of problematic social relationships with nature. This reconceptualization of environmental crisis is not a novel idea for Chinese scholars of Confucianism and traditional Chinese philosophy, who see nature as the ceaseless vitality of the cosmic process of regeneration, and the environmental crisis as a wake-up call for harmonizing problematic

5 In the era of economic reforms, the gradient development theory, a term coined by Chinese economic strategists, was similar to Deng Xiaoping’s adage “to get rich first is glorious.” It was intended to concentrate limited national resources on selective sites for economic development, in the hope that after the selected eastern region becomes the national economic center it would in turn help develop other regions into economic centers (Li and Meng 2001).

186

yuehtsen juliette chung

socio-political relationships with nature. This conventional wisdom from Chinese indigenous tradition helps push our critical awareness towards the optimal condition of automatic reflexivity and reflection in light of the current popularity of Confucian studies in China and worldwide. In this chapter I take the approach of historical reflection and environmental realism with the intention to refresh and enhance a balanced view that captures, on the one hand, the State’s desire for environmental protection proclaimed by the Chinese political leaders and the Ministry of Environmental Affairs, and, on the other hand, the global demand for environmental conservation, and local interest in economic development with respect to the population’s quality of life (e.g., health, education and happiness) along the Silk Road. Such an approach is based on my premises that Chinese state capitalists at the central and regional levels are more Chinese than Marxian to the extent that they seek to optimize the best interests of state capital in both symbolic and material terms, instead of dogmatically warranting Marx’s law of value.6 With this premise in mind, I believe this approach not only broadens our perspective on the global present but it also engages us politically with the future to stimulate a dynamic process of negotiation and reconciliation across a wide spectrum of social actors. Historical Reflection of ‘Develop the West’ Campaigns Focusing on available sources for the historical discourse of ‘Develop the West’ (kaifa xibu), I explore the politics of history and human geography of the western region. I also examine historical management in the Late Qing Empire and industrial plans during the Republican era and the PRC’s Han Chinese settlement policy of six decades, in order to understand the socio-cultural meaning of regional differences in the multi-ethnic economic activities and conventional patterns of politics shaped by local ecological conditions. Archaeologically, the western region was a site of evolution for Homo sapiens and various Neolithic cultures. Historically, the region has been a political and cultural center for various Chinese dynasties and a place of ethnic mingling central to 6 My premises are inspired by Vincent K. Pollard’s questioning of the limits of Marxian analysis of self-styled Marxist-Leninist regimes and whether the law of value effectively explains the workings of capitalism desensitizing ruling communist elites to policies destructive of the environment (Pollard 2008).

the post-socialist condition in china

187

the formation of Chinese civilization. Trade along the northern and southern routes of the Silk Road has sustained different dynastic empires and the cultural vitality of the region. Dynastic changes and environmental degradation, however, have gradually shifted the political and cultural centers to the eastern region. The current internationally recognized national boundaries were established in the Qing, the last dynasty. The Qianlong Emperor’s northwest military campaigns and conclusive victory in 1759 brought vast territories on China’s Central Asian frontier within the Chinese empire. The newly expanded territories, named ‘Xinjiang,’ formed a frontier region to which the Manchus dispatched political and criminal exiles for territorial colonization and rehabilitation (Joanna Waley-Cohen 1991). In addition to political and juristic concerns, the Qing government followed the approach of its predecessors in encouraging migration and farming settlements to secure the territorial gains. To ameliorate the hardships of settlement and demonstrate the emperor’s benevolence, the Qing government consistently reduced land and grain taxes. To manage a multi-ethnic empire, the Qing government tolerated diverse religions. The emperor himself was a religious figure who sanctioned the Dalai Lama, the Taoist chief, and the Confucian masters, to strengthen celestial royalty. Under the threat of Russian expansion along the northwest border, Qing officials such as Lin Zexu, Wei Yuan and Gong Zizhen submitted memorials recommending mass migration from Beijing, Zhili, Shangdong, Henan, Shaanxi and Gansu, farming settlements and a stationed army, sponsored by government funding, instead of relying upon the traditional practice of self-finance. They further suggested that Xinjiang become a province, to press the territorial claim in international terms and deploy military defense alongside the farmersettlers. After being dismissed from his Imperial commissioner post and sent into exile in Xinjiang after the Opium War, Lin Zexu worked together with the Ili general, Buyantai, and led the farming campaigns in the southern areas for irrigation and waterway construction. He improved the indigenous welling system by connecting individual welling units into regional underground waterways and transformed barren land into arable fields. His farming campaigns also involved both Han Chinese and Muslims to bolster cross-cultural understanding (Zhao Songrao and Wu Xiaojun 2001:71–74). Lin’s approach to inter-ethnic collaboration and coexistence in farming settlements was inspired by Buyantai’s predecessor Song Yun (1753–1835) who was a

188

yuehtsen juliette chung

Mongolian Blue Bannerman and served as the Ili general for two terms.7 In addition to increasing Muslim stationed settlements to supplement food supply, Song Yun also proposed the establishment of Manchu farming settlements to produce the Bannermen’s own grain rations. This proposition initially antagonized the Manchus, who considered themselves superior rulers and felt that collective farming would degrade their socio-political status, but it later proved a success. To secure that success, Song Yun provided several regulations: 1) distribute land as inheritable property to anyone who would tend the field; 2) dispatch farming experts to instruct in technology and supervise production; 3) make sure every idle bannerman receives land to produce his own provisions and return the surplus to the public granary; 4) prohibit private land sale transactions. Wei Yuan once praised such a settlement policy as highly efficient in reducing governmental expenditures and recommended to apply it nationwide. Song Yun believed that mining enterprises would generate great profits for which the government should not compete with local people. Hence he issued appropriate licenses to qualified individuals and levied taxes accordingly (Jia Yunhe 1995). Song’s approaches proved insightful and inspired subsequent successors. Influenced by Lin Zexu and Wei Yuan, Zuo Zongtang, the then governor-general of Fujian and Zhejiang, urged the Qing court to incorporate Xinjiang as a province, after he crushed the Muslim rebellions in Shaanxi and Gansu in 1873 and before he defeated Yakub Beg’s invasion in Xinjiang in 1877. To prepare for the campaigns to recover Xinjiang, Zuo set up an arsenal in Xian and later moved to Lanzhou to manufacture the required ammunition locally in order to save time and the cost of transportation from the east coast. To raise money and supplement military expenditure, Zuo employed an arsenal of machinery for textile, mining and mintage production; he can be considered a pioneer in raising funds from government and commercial sources. Zuo improved transportation and communication to enhance regional 7 The Manchu Banner System was a military and civil administrative organization in which the Manchu clans incorporated Mongol and Chinese subjects and allies for their military campaigns and colonization. The system comprised eight divisions of different banners including Solid Yellow Banner, Inlayed Yellow Banner, Solid White Banner, Inlayed White Banner, Solid Red Banner, Inlayed Red Banner, Solid Blue Banner and Inlayed Blue Banner. Each banner commanded 300–800 basic units and altogether the rough total of soldiers was 120,000 within the system, throughout different emperor reigns.

the post-socialist condition in china

189

prosperity and commercial resources. He also introduced cotton plantations and silk horticulture to replace opium crops and ordered topsoil to be added to barren land to fertilize the fields and experiment with new crops. He established schools and local academies, and instituted a county examination system in order to keep the educated elite content with their regional identity and provide them with meaningful service in the locale. After Zuo left his post, the manufacturing infrastructure was intact, but the arsenal and textile bureau ceased to function until the turn of the twentieth century, when private and international capital penetrated the region under governmental supervision. A Russian company, for instance, signed a five-year contract with the Qing government in Tacheng, Xinjiang in 1899 to mine gold. In 1906, Germany won a bid for the construction of an iron bridge over the Yellow River in Lanzhou and completed it in 1909. Gansu copper mill was partly funded by Belgian investment from 1906, while its matches industry was an outcome of the local gentry’s joint venture in 1910. The first oil well was drilled in Shaanxi in 1907 with the help of Japanese experts and technicians and produced roughly one ton daily. In 1909, the second well was drilled in Xinjiang and produced oil in the refinery purchased by Russia. Modern tanneries were also the products of Sino-Russian joint ventures in Shaanxi and Xinjiang. A lucrative fur trade predominated between Xinjiang, India and Afghanistan. None of the Russian, British and Indian traders, though, paid tariffs or sales taxes to the Chinese government according to the most-favored nation treatment in the unequal treaties signed with the Imperialist powers. The terrain of the fur trade expanded to Gansu, Ningxia, Tibet and Qinghai alongside imperialist penetration and the decline of Qing power. These lucrative international activities in the region would not have been sustainable without the livelihoods maintained by the local populace and the governance provided by local governors and magistrates, who constantly replenished the ecosystem in the local world by clearing waterways and carrying on irrigation work and forestry. Although these historical developmental campaigns did not specifically incorporate environmental protection, an embedded ecological concern can be detected, alongside efforts to balance urban and rural areas, coast and hinterland, and center and periphery; improvements in the regions were considered essential to the wellbeing of the national whole. Such a developmental mentality conforms to the conventional Chinese cosmological idea of unity of nature as perceived in

190

yuehtsen juliette chung

the ceaseless regeneration in the “course of Heaven,” a spontaneously self-generating life process on Earth and harmonious human relations (Tu Weiming 1984). As an ongoing vision of modernization since 1894 — when Sun Yat-sen submitted his proposition to Li Hongzhang, who was sponsoring the late Qing reform programs — the plan for a new Republic of China was carried on after the 1911 Revolution and presented in Sun’s important work Three People’s Principles in 1921. Sun incorporated the western region into the national economy in his ‘Enterprise Scheme,’ a strategic plan in the section “The Principle of People’s Livelihood.” He argued that to balance the development in the coastal and inland regions, public transportation, mass migration from the east coast, as well as an influx of foreign capital, were all essential to bolster labor supply and technology transfer. However, Sun warned against the colonial modernity imposed by the imperialist powers in the late Qing era, when the Qing court sold off national sovereignty and special privileges such as customs tariffs in exchange for foreign loans (Zheng Shufen 1999). Sun wanted to break free of the shackles of unequal treaties imposed by the imperialist powers; he also argued that land tenure is a right for anyone who tills the land and called on the government to restore such rights to the peasants, thus eradicating the feudal relationship between landlord and tenants and, by regulating capital flows, curbing the tendency of land to amass in the hands of a rich few. This approach not only made sense at the time but, I argue, makes sense for the present and future. How could one expect the majority of the Chinese population (ethnically Chinese or not) to preserve or conserve the environment if they do not own any of it? Without such a stake in the reality, environmental ethics advocated by the western laissez-faire environmentalism are little more than wellmeaning fantasy. After ending a decade of civil wars among the warlords, the Nationalist Party finally established the central government in Nanjing in 1928 and began another decade of reform campaigns. One of these was the ‘Develop the Northwest’ campaign, which fostered a number of intellectual societies and discussion forums. Northwestern development was thought to be a strategically pressing matter, in the face of Japanese encroachment in Manchuria after the Mukden Incident in 1930 and the attack on Shanghai in 1932. On March 5, 1932, the central authority of the Nationalist Party decided that Xian (called Changan then) would become an alternate capital; the ‘Develop the

the post-socialist condition in china

191

West’ campaigns were viewed as a matter of national survival and national security in view of threats from Russia, Britain and Japan. Politicians subsequently visited the Northwest to better their knowledge of the region. During this period, the six provinces of the Northwest together accounted for one quarter of the national output in cotton, hemp, herbs and furs. In terms of modern industry, however, the Northwest had only 6% of factories, 4% of national capital, 7% of skilled workers and 2% of electricity output. To homogenize the national economy and prepare for war, the Nationalist government adopted an aggressive industrial planning regime to develop the transportation network, mining, and encourage farming migration in the Northwest, especially agrarian migrants from Shandong, Hebei and Henan, who had recently lost their livelihood to Japanese aggression. In addition to upgrading the skills of these migrants, the Nationalist government also sought educators for their volunteer service to the west and encouraged young people of various ethnic groups to go east for education and vocational training in order to reconcile cultural differences and move towards equal opportunities within education (Ge Fei 2001). In July of 1932, roughly 200 scholars and other members of the cultural elite rallied to form a Northwest Study Group, as well as other publication societies for northwest studies. Activists, including experts, students, teachers and overseas Chinese, organized survey teams to the western region to conduct on-site investigations and reported their findings and policy recommendations in the mass media. Overall, they called for improvements in transportation, irrigation and waterways, mining and industrialization, and for increased migration and farming settlements. Some other voices also made revealing points. One author, Wang Zhi, claimed in 1934 that the development of China’s West was suicidal. He believed that the problems of regional poverty and underdevelopment were caused by perennial corruption and exploitation by local bullies; the development campaigns only scratched the surface. He argued that, without comprehensive political reforms and tax reduction, the construction of railroads and freeways would only accelerate local exploitation, while the establishment of local banks would only drive peasants to hand over their tools for bank loans (Yang Liping 2003). Another author, Fan Zijue, argued against farming settlements since mass migration without careful planning and thorough geographic investigation would worsen the deforestation and desertification in the

192

yuehtsen juliette chung

Northwest. He suggested that the coastal areas provide food subsidies in exchange for energy resources extracted from the West, and that the Northwest return farming areas to grassland. Zhang Renjian proposed a scheme of urbanization for several major cities in the Northwest; he wanted them to act as converging centers of development resources in order to later disperse their magnetic influence and extend the development projects to remote rural areas (Yang Liping 2003). After the outbreak of the Sino-Japanese War in 1937, the political and military situation in China became more complicated: not only was China fighting Japan, but a civil war raged within the country. After December 1941, this coincided with an international war between Western colonial powers in Asia and Japan. As the Japanese occupied the coastal areas, the Nationalist government relocated in the alternate capital of Chongqing, planning to move to Lanzhou and Urumqi (called Dihua then) if the Japanese encroached further inland. The communists stationed their army bases in the border areas of Shaanxi, Gansu and Ningxia. During this wartime era, the Nationalist government’s industrial planning mainly revolved around national defence, which immediately boosted local economies and enhanced mass transportation. Farming land in Shaanxi and Gansu expanded from 30,883,000 and 21,676,000 acres in 1934, to 45,627,000 and 26,167,000 acres in 1946. Cotton and wheat plantations also increased. Some of the infrastructure of heavy industry, irrigation and waterways built during this period remained intact into the Communist era (Cao Min 2001). Among the industrial planning schemes administered by the Nationalist government, the most innovative was the proposal of Chinese eugenicist Pan Guangdan. In the fall of 1941, Pan Guangdan and his sociologist colleagues were invited by the Nationalist government to participate in drafting guidelines for the National Population Policy. These guidelines incorporated the eugenicist principle of preventing the proliferation of ‘defective genetic elements.’ The guidelines also prohibited abortion, infanticide, concubinage, abduction and human trafficking, increased the frontier population by implementing public health measures, bolstered educational facilities, enhanced industrialization and environmental improvement, and, most intriguingly, encouraged interracial and interethnic marriage in order to strengthen national unity and provide human resources for military conscription. In spite of Pan’s practical concern with the ethnic minorities as a source for military conscription, from the point of view of theory,

the post-socialist condition in china

193

he did not consider the Han Chinese and minorities as a single racial group. He believed that superior and inferior lineage could be located within the same racial group and within every racial group. In 1943, Pan suggested that the Chinese State carefully “elevate the cultural standard of the minorities” without downgrading their vigorous genetic quality, which the overly civilized and thereby degenerate Han Chinese were lacking. Pan hoped that the Han Chinese and the frontier minorities could supplement each other in order to reproduce better Chinese offspring. During the wartime era, Chinese communists stationed in the border areas of Shaanxi, Gansu and Ningxia not only actively disseminated ideological propaganda to gain rural followers, but also sought support and commercial investment from overseas Chinese to build modern industry in the base areas. Mao Zedong and other party leaders expressed immense interest in Sino-American cooperation and American financial support for China’s postwar reconstruction and industrialization. Mao offered favorable conditions and privileges to lure foreign ventures. Subsequently, overseas Chinese investment helped establish several manufacturing plants producing textiles, paper, chemicals and pharmaceuticals in Yanan in 1942 (Li Yongfang 1995). Overcoming the Japanese and the Nationalist blockades, the Communists achieved self-sufficiency in the production of sundry items such as soap, salt, oil, wheat flour, poultry and the like. They also organized handicraft workshops to produce yarn and cloth to satisfy local consumption. One impressive achievement during these difficult years was literacy enhancement. The education budget of the base areas increased from 7.5% in 1939 to 25% in 1945. A total of 1,341 primary schools had been established by 1940, up from 320 in 1937, not to mention the rapidly increasing number of secondary schools and higher academies (Zhao Songrao and Wu Xiaojun 2001). After the Communists took over in Mainland China in 1949, the modernization project continued except during the eras of political campaigns such as the Anti-rightist movement, the Great Leap Forward and the Cultural Revolution. Table 1 shows the achievements of industrialization claimed in the statistical yearbooks. The comparison between 1952 and 1998 serves a contrast with the ‘Develop the West’ campaigns launched from 1999 to the present and demonstrates a historical continuity of Chinese state capitalists’ efforts to optimize the best interest of state capital. Such historical continuity in Communist China from the 1930s to the present confirms my premise that Chinese

194

yuehtsen juliette chung

Table 1. Industrial and Transportation Development in Ethnic Autonomous Regions, 1998 and 1952 Item/Time/Unit

1952

Total Industrial output 5.4 (100 million yuan) Iron (10000 tons) 0.9 Steel (10000 tons) 0.06 Coal (10000 tons) 1780 Oil (10000 tons) 5.2 Electricity 0.8 (100 million klwt/hr) Railway operation mileage 0.376 (10000 km) Freeway operation mileage 2.6 (10000 km) Postal delivery length 13.2 (10000 km)

1998 5315

Growth Change 984

701.73 632.8 17568.6 2047.24 1323.1

780 10547 10 394 1654

1.73

5

37.41

14

113.54

9

Source: PRC State Council Information Office White Book 1999. Zhongguode shaoshu minzu zhengce Jiqi shijian (The Policy and Practice of Chinese Minorities).

state capitalists at the central and regional levels are more Chinese than Marxian. Literacy has also improved markedly in the western region over five decades. For instance, the admission rates for primary school children in Gansu was 92% in 1998, 99% in Chongqing, 98% in Yunnan, 97% in Guizhou and 81% in Tibet. Over five decades, the central government offered subsidies to the ethnic autonomous regions amounting to a total of 16.8 billion yuan from 1955 to 1998, as well as favorable loans and donations in times of drought, famine or natural disasters. However, in view of five decades of Han Chinese settlement, these ethnic regions are not as autonomous as officially claimed, since Han Chinese settlers have superimposed an alternate administration on the indigenous systems. The original intention of co-existence and eliminating Han chauvinism has generated the unintended consequences of cultural-ethnic segregation and concealed hostility. The above presentation of historical discourse is extremely important to the extent that it challenges the contemporary equation of

the post-socialist condition in china

195

economics with mere statistical enumeration of a given totalized entity. It further challenges economists’ habitual treatment of historical-cultural factors as ‘extra-economic’ and thus ‘non-economic.’ I argue that these historical-cultural factors are as solid as statistical figures and that governance is not mere management of numbers. This stance of environmental realism and the presentation of the history of regional territorializing efforts facilitate our understanding of how the concept of the Chinese national economy has been formed and reshaped over different time periods. Develop the West: What and How? ‘Equality’ was a founding moral principle of Chinese Communism and a political ideal legitimizing Chinese Communist rule. Following Deng Xiaoping’s adage ‘to get rich first is glorious,’ the reform campaigns since the late 1970s have generated a widening gap in wealth distribution between the eastern and western regions, and between the urban coastal and rural inland areas (see Table 2). Between 1981–1989, moreover, 50% of nation-wide developmental funds, totalling 900 billion yuan (ca. $110 billion), were invested in the eastern region, and only 27% in the western region. In 1998, the combined revenue of the 10 provinces in the western region amounted to only 30% of that of the eastern region, and its regional developmental investment came to only a third of that of the eastern region. Deng’s gradient development theory, which assumes that the market economy will make the east, central and west regions of China develop in tandem, with those getting rich fastest helping those in which poverty is more persistent, has proved romantic and impractical. Without appropriate intervention, the market economy would in fact deepen the divisions of income and ethnicity. To bridge the gap generated by uneven economic development and reduce the resulting ethnic tension, the Chinese government initiated Western regional development planning in 1985. In 1994, the State Council pledged their support for, and commitment to, sustainable development in the State implementation of China’s Agenda 21—White Paper on China’s Population, Environment, and Development in the 21st Century, prepared together by the State Development Planning Commission, the Ministry of Foreign Affairs, the Ministry of Science and Technology and the State Environmental Protection

196

yuehtsen juliette chung

Table 2. Growth in Per Capita Income of Rural Villagers (yuan) 1990–2007 City Beijing Tianjin Hebei Shanxi Inner Mongolia Liaoning Jilin Heilongjiang Shanghai Jiangsu Zhejiang Anhui Fujian Jiangxi Shandong Henan Hubei Hunan Guangdong Guangxi Hainan Chongqing Sichuan Gguizhou Yunnan Tibet Shaanxi Gansu Qinghai Ningxia Xinjiang

1990

2000

2007

1297.05 1069.04 621.67 603.51 607.15 836.17 803.52 759.86 1097.32 959.06 1099.04 539.16 764.41 669.90 680.18 526.95 670.80 664.24 1043.03 639.45 696.22 557.76 557.76 435.14 540.86 649.71 530.80 430.98 559.78 578.13 683.47

4604.55 3622.39 2478.86 1905.61 2038.21 2355.58 2022.50 2148.22 5596.37 3595.09 4253.67 1934.57 3230.49 2135.30 2659.20 1985.82 2268.59 2197.16 3654.48 1864.51 2182.26 1892.44 1903.60 1374.16 1478.60 1330.81 1443.86 1428.68 1490.49 1724.30 1618.08

9439.63 7010.06 4293.43 3665.66 3953.10 4773.43 4191.34 4132.29 10144.62 6561.01 8265.15 3556.27 5467.08 4044.70 4985.34 3851.60 3997.48 3904.20 5624.04 3224.05 3791.37 3509.29 3546.69 2373.99 2634.09 2788.20 2644.69 2328.92 2683.78 3180.84 3182.97

Source: (Zhou Yi 2002) and Chinese Statistics Yearbook 2008. Please note the Chinese yuan has appreciated roughly 17% in recent years.

the post-socialist condition in china

197

Administration.8 In 1999, the Chinese government launched the ‘Develop the West’ campaigns, which aimed to do the following: 1) Enhance transportation and mass communication infrastructure, expand waterway, freeway and railway construction, connect pipelines to transfer natural gas from Xinjiang to Shanghai, and divert water from the Yangtze River to the parched north. 2) Advance irrigation technology and strengthen ecological protection along the upstream areas of the Yangtze River and Yellow River to ensure cleaner water resources, and curb increasing deforestation and desertification by enlarging the proportion of forests and grassland. 3) Develop resources of human geography to promote tourism as a profitable third industry. 4) Improve science and technology education to provide the necessary human resources. 5) Create better conditions for domestic and foreign investment by offering tax deductions, tariff free privileges and bank loans. These campaigns have been embraced by regional governments, while Hong Kong businesses and other foreign investors, who see the campaigns as a gold mine, have been eager to get involved.9 In addition to signing investment contracts for manufacturing sectors, the Hong Kong financial industry has become a major channel for international capital, which came up to a total of US$40 billion ready to loan local enterprises for their investment in the western region in 2001; 90% of

8 This proposal was China’s version of Agenda 21, the Rio Declaration on Environment and Development and the Statement of Principles for the Sustainable Management of Forests, which were adopted by more than 178 Governments at the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, Brazil, June 3–14, 1992. 9 The Hong Kong Chamber of Commerce organized several tours to explore the western region for investment opportunities since the launch of the ‘Develop the West’ campaigns in 1999. The tour in 2001 signed a contract of HK$1 billion. In 2002, Hong Kong established 5,204 enterprises with a total capital of US$6.9 billion in Guangxi alone, see China ORG.CN. http://china.com.cn/chinese/EC-c/194588.htm. Accessed May 22, 2004. Xinhua News posted this news initially on August 26, 2002. The foreign investors were major multinational corporations such as General Motors, Philips, IBM, DuPont, Whirl Pool, Mitsui, Hitachi, Mitsubishi, Motorola, Toyota, Siemens, Brother, and the like.

198

yuehtsen juliette chung

American investors were willing to establish a branch office headquarters in Hong Kong.10 In the mass media, officials and scholars voiced their support for the State’s ‘Develop the West’ campaigns as timely preventive measures to reverse the market-driven vicious cycle of increasing cleavages based on national and ethnic revivalism, between urban and rural, coastal and hinterland, and center and periphery areas. The newspaper, Shanghai Youth Daily, (March 2, 2000), published interviews with several technicians, engineers and schoolteachers in Shanghai who settled in the western region in the 1950s and 1960s, and contributed their precious life and work for three decades. These volunteer youth who were mobilized and sent down by Chairman Mao were assigned various factory posts without regard to their diverse training backgrounds. Some eventually assumed better positions as researchers and teachers and helped to train a new generation of local professionals in the western provinces. All of them claimed to view their contribution and sacrifice without regret. They romanticized the current ‘Develop the West’ campaigns as a fountain to rejuvenate their youth and expressed their emotional impulse to participate once again in the campaigns.11 Unlike this romantic generation, the new breed of college graduates are currently granted privileges, such as various living allowances and subsidies, travel and medical insurance and nontransferring household registration,12 should they volunteer to work in the western region for one to three years. China adopted the Environmental Protection Law in 1979 and yet the priority then was given to economic development over pollution prevention. In the 1990s, sustainable development was in vogue and became a focus of Chinese political leaders’ public speeches. Former Premier Zhu Rongji, vice-Premier Wen Jiaobao and former President Jiang Zemin have reiterated in the press the importance of pollution control in the development campaigns. Jiang especially emphasized on

10 See the news announcement at China News. http://www.chinanews.com. cn/2001-09-07/26/120061.html. Accessed May 22, 2004. This news was originally posted September 7, 2001. 11 See the news report “Zongshu: Shanghai laobaixing tan xibu kaifa” (Comprehensive discourse: Shanghai folks’ discussion of ‘Develop the West’). Sina News Net. Online edition. http://news.sina.com.cn/china/2000-3-2/67068.html. Accessed June 29, 2004. The newspaper Shanghai Youth posted this report originally on March 2,2000. 12 Nontransferral of household registration was a privilege granted by the government to guarantee the volunteers’ return to their previous residence.

the post-socialist condition in china

199

March 12, 2002, the potential of population health and environmental protection to achieve better human resources. He emphasized the priority of avoiding the conventional industrialization path of ‘pollution first and treatment later,’ and highlighted the principle that China should not sacrifice environment and resources for economic growth.13 This principle has been endorsed by the National Bureau of Environmental Protection, which succeeded in influencing the enactment of the ‘Develop the West’ Bill in the National Assembly to make sure pollution control regulations were applied in the development campaigns. The Committee of Environment and Resource Protection in the National Assembly began to review draft laws and regulations on controlling air-pollution and desertification, the promotion of clean manufacturing processes and monitoring environmental impact. Since the late 1990s, the Chinese government has increased its national budget for the prevention of environmental pollution. Such investments have reached 260 billion yuan annually and accounted for 1.2 percent of its GDP before 2006. Over 2000 environmental organizations have been registered nation-wide, and numerous Chinese government websites extol environmental protection and resource conservation.14 Thirty-six major projects have been initiated since 2000 and are in various stages of construction. The railway linking Tibet and Qinghai and the project to divert water from the Yangtze River to the north have been launched. A pipeline to transfer natural gas from Xinjiang to Shanghai has been completed, with ten regional pipelines already in use and ready to extract natural gas reserves of 22.4 trillion cubic meters, 59% of the total Chinese reserves, for the consumption of major cities in the western region. The ground-breaking project “transporting electricity generated in the West to the East” is an ambitious attempt to exploit 90% of China’s hydroelectric capacity – 378 million kilowatts in the western region – and transport it to the coastal region, where seven provinces currently consume 40% of national electricity output. The centralized plan for production and consumption of electricity was rooted in the central government’s desire to shut

13 Jiang Zemin’s talk was given at the central seminar of “Population, Resources and Environment” prepared for the 2002 Conference for World Sustainable Development in Johannesburg. 14 Dongbei University of Finance and Economics Environment Conservancy Association at http://www.dufe.edu.cn/studentlife/huanbaoxiehui/education/hbzz .htm. Accessed March 27, 2006.

200

yuehtsen juliette chung

down numerous highly polluting thermo-power plants managed by regional small enterprises. In July, 2006, the first railway to Qinghai and Tibet was completed and in June of 2009, the second fully electric railway to Tibet and Yunnan was under construction.15 The western region’s impressive GDP growth rate, of 7.2% in 1999, 8.5% in 2000, 8.7% in 2001, 9.9% in 2002, and 10.8% in the first quarter of 2003, has narrowed the gap between national and regional GDP rates to 0.6%. The recently released 2009 blue book reported that the GDP growth rate in the western region has been 11.42% from 1998 to 2008 and higher than the national average (9.64%). Moreover, the regional revenue for the first quarter is up 14%, which approximates the national average. From 2002, the western region has taken the lead in the first quarter in the investment of fixed assets, with a 40.8% upsurge. The ‘Develop the West’ campaigns of 2000–2002 were reported to have solved the problem of insufficient drinking water for 13 million people; 94.7 billion yuan were invested to rewire electricity in rural villages of the region, and 699 villages were intended to have electricity for the first time ever; 27.1 billion yuan were spent installing oil pipelines connected up to the county-level; and 97% of television broadcasts reached all major villages. In addition, the central government promised to provide basic healthcare in impoverished counties.16 Feeling that China squandered two precious decades of economic reform during the Mao era, the Chinese government in 1999 was highly motivated, ambitious, determined, and aggressive in implementing the ‘Develop the West’ campaigns; it was eager to catch up with the developed countries as quickly as possible. The government was also keen to present itself as a responsible actor within the world economy, actively meeting the global demands of environmental conservation and population control, and preparing for the possible impact of entering the World Trade Organization in December 2001. It had little tolerance of any open challenges to its political legitimacy. Despite the limits of freedom of press and speech, a governmental blockade of 10% of websites and a digital divide that excludes the vast

15 China Tibet Online. http://english.people.com.cn/90001/90778/90857/90860/66 77607.html, Accessed August 14, 2009. 16 For the most recent update of ‘Develop the West’ campaigns, China ORG.CN. provides a specified section on the campaigns and the topic of infrastructure construction. http://www.china.com.cn/zhuanti/115/node_5781722.htm. Accessed August 14, 2009.

the post-socialist condition in china

201

majority of the rural population, internet and non-governmental organizations have been nurturing the growing civil society, thus broadening the public sphere and aiming to amass sufficient agency for their emergence as powerful actors capable of interacting with the State(s).17 The developmental commitment of the Chinese government and the emergence of civil society must be put into perspective to enhance our observations and evaluations of China’s ‘Develop the West’ campaigns, and our understanding of the potential roles of international actors. Problems: Environmental Impacts Despite the Chinese government’s commitment to balancing competing claims of economic growth and environmental protection, pollution and environmental degradation are undeniable realities of people’s lives. Gansu, for instance, received 15.6 billion yuan (approximately US$2 billion) in 1999 and has been selected by the central government as one of three production bases for stainless steel. Gansu and other western regions have failed to simultaneously implement comprehensive environmental protection measures and monitoring plans, and are therefore experiencing environmental degradation similar to that in other developed and developing countries. Most problematically, the local drive to rapidly catch up with the eastern seaboard has led local governments to lure more investment by compromising critical environmental standards for the type of heavy polluting industries that have become obsolete in developed regions and countries. It is reported that township and village enterprises nation-wide produced 91.2% of industrial solid waste in 1997.18 Should such damaging practices and obsolete technology move inland, it would have a tremendous impact on the western region. Table 3 provides statistics on pollution accidents reported in the Western Region during 1998–2006. 17 The Berkman Center for Internet and Society at Harvard conducted a study of 204,012 Chinese websites in 2002 and found it impossible to access 18,931 sites from China, see BBC report on December 4, 2002 at http://news.bbc.co.uk/2/hi/asiapacific/2541431.stm. 18 Anonymous author. “Zhongguo huanjing wuran fangzhi jishu jinzhan” Huanjing Shengtai Wang (Environment and Ecology Net). Online edition. http://www.eedu.org. cn/Article/ShowArticle.asp?ArticleID=6965. Article revised on January 1, 2006. Accessed August 14, 2009.

202

yuehtsen juliette chung

Table 3. Occurrences of Pollution Accidents in Gansu and the Western Region 1998–2006 Year

1998 1999 2000 2001 2005 2006

Pollution Accidents (number of occurrences) Gansu

Western Region Total

National Total

Western Region % of China

65 99 114 125 135 72

249 447 881 457 601 248

1422 1614 2411 1842 1406 842

18 28 37 25 42.7 29.4

Source: Zhongguo tongji nianjian: Chinese Statistics Yearbook, 1998–2008. In the Yearbook for 2007 and 2008, calendar year 2006 is the latest for which data are available.

The statistics in the Yearbooks are not thoroughly comprehensive and areas like Tibet, Qinghai, Ningxia and Xinjiang do not have full records of accidents. Hence the percentage of pollution accidents in the western region should be estimated higher than those in the Table. According to a World Bank study in 1997, the total national financial loss caused by pollution incidents came to 38.1 billion yuan (ca. 6.75% of GDP) in 1986, 36.7 billion (ca. 2.1%) in 1990, 109.6 billion (ca. 4.5%) in 1992, 108.5 billion (ca. 3.2%) in 1993 and 442.8 billion (water and air pollution combined losses alone, 3%–8% of GDP) in 1997. From 1999 to 2001, the financial loss caused by pollution accidents in Gansu alone amounted to 52 million yuan, 64% of that in the entire western region. Compared to these figures in Table 3, Gansu, from 1998 to 2006, has clearly encountered environmental impacts from the ‘Develop the West’ campaigns, as shown by the recent upsurge in 2001–2005, in the number of pollution accidents. Furthermore, the long-term impact on people’s health and the subsequent social-financial liabilities to Chinese society are incalculable and hence invisible in the eyes of Chinese statisticians. There are currently 50 million disabled people in China, the majority of whom live in the western region. In southern parts of Gansu and Shaanxi respectively, 262,000 and 220,000 mentally challenged people live, their condition caused by poverty, environmental degradation, endemic

the post-socialist condition in china

203

diseases and village inbreeding (Zhou Yi 2002). Such figures are a useful index testifying to the ecological frailty of the western region, which poses a great challenge to Chinese demographers’ assumption that economic growth would be sustained by a plentiful supply of cheap labor from inland. On the path to urbanization and industrialization, Chinese cities have encountered trends towards population ageing, late marriage, non-marriage, and a disconnection between wedlock and childbearing. According to a report in China Youth Daily on January 18, 2000, 10%–15% of childbearing-age couples in Guangzhou suffer infertility due to environmental pollution and a stressful lifestyle. Nation-wide, infertility at childbearing-age affects 35 million couples.19 It does not appear far-fetched to imagine that the problem of urban infertility may appear in inland rural areas along with the ‘Develop the West’ campaigns. The results of unequal distribution of hazards and the unintended consequences of modernity may create a chain reaction flowing indiscriminately across divides of ethnicity, class and nation. Other developed and developing regions have witnessed this phenomenon; can the development campaigns ‘with Chinese characteristics’ avoid the same path? Historical Legacy and Contending Chinese Characteristics of Development The historical discussion of ‘Develop the West’ provides cultural meanings and helps interrogate the so-called ‘Chinese characteristics’ of development. In other words, what is the historical legacy that bequeaths the meaning and substance of these Chinese characteristics? Could it be Mao’s declaration of ‘war against nature’ as Judith Shapiro’s work has shown us? Shapiro probes Mao’s massive naturecontrol experiments such as terracing mountains and filling lakes during the Great Leap Forward, a mobilization campaign to catch up with Britain and the United States and counter the Soviet threat. The State’s forced relocations and suppression of intellectual and political freedoms contributed to a wide range of environmental problems, ranging from 19 China Youth Daily. Posted on January 18, 2001. Online edition. http://health. online.sh.cn/gb/content/2003-04/11/content_569373.htm. Accessed April 11, 2003. This webpage was no longer valid. However, the percentage of infertility among childbearing-age couples in Guangdong remains around 13%, see Nanfang Daily. November 13, 2007. Online edition. http://news.sohu.com/20071113/n253216172.shtml. Accessed August 19, 2009.

204

yuehtsen juliette chung

deforestation and desertification to ill-conceived engineering projects that degraded major river courses; they achieved no positive results (Judith Shapiro 2001; Hong Jiang 1999). Further research along these lines would help illuminate the Chinese government’s characterization of ‘Chineseness’ in the current development campaigns. By way of contrast and contention, the auto-reflexive developmental campaigns that I am suggesting should take place are grounded in a different ‘Chineseness’—one constituted by the actual lived history and conventional Chinese ecological outlook informed by prevailing Confucian studies world-wide. Conceptually, the notion of the human body is analogous to the social body, and hence logically human excrement corresponds to environmental waste produced by modernization and industrialization. The culturally embedded Chinese ecological outlook had transformed human excrement into a life-giving fertilizer source and sustained Chinese agriculture for millennia, whereas the environmental waste from industrial development has hopelessly degraded human livelihood and depleted ecological resources. As human bodily fluids are the source of impurity and pollution that allegorically give rise to different views or even discrimination based on gender (for instance women were regarded inferior and threatening because their menstruation was deemed as a source of pollution), the environmental waste and degradation produced by modernization often trigger ethnic conflicts and regional disturbances. Likewise, the solution of religious transcendent purification of individual bodies can inspire an analogous solution whereby reflexive modernity could integrate the conventional Chinese ecological outlook and the historical reflection of the Chinese experience of ‘Develop the West’ Campaigns as I have discussed here. Without such reflexive modernity, economic development is unlikely to reduce ethnic tensions; modernization risks becoming a process of recolonization and incessant exploitation of resources as the central and local governments act in their own best interests and the development campaigns would retread the same path with or without the claimed Chinese characteristics. To conclude my historical discussion and to find the way that could sway the ‘gradient’ outcomes to a workable balance, several points need to be made. First, the historical developmental campaigns in the region would have been impossible had they not simultaneously maintained the livelihood of the local populace and constantly replenished the ecosystem in the local world by clearing waterways and carrying out

the post-socialist condition in china

205

irrigation work and forestry. Second, the land tenure system espoused in Sun Yat-sen’s ideal of economic equality remains indispensable to keep the majority of the population (ethnically Chinese or not) content on the land that feeds their stomachs and clothes their bodies. This system is underpinned by an ecological rationale that to conserve the land and environment is to nourish the body. Without such balance, the current privatization campaigns in the urban areas will only draw more inflows of migration from the inland rural areas. Third, the current financial distribution of national revenues and expenditures administered by the central government is structurally unjust and needs to be reorganized. Within this system of centralized distribution, not only are the profits generated from the western region’s natural resources rendered invisible, but also financial compensation for environmental hazards and land appropriation to the indigenous minority population takes the form of ‘subsidies’ at the mercy of the central government. Without such financial restructuring, the central government will forever give priority in budgetary expenditure to the center, while local governments are forced to exploit their own locales (cases being surcharges and provincial tariff ) as their only means of financial manoeuvre. Urban migrants to the western region will not identify with the periphery, their career path always orienting them towards the center. Fourth, as an atheist regime, the communist government has failed to harness the cultural resources of religious traditions in its ethnic minority policy and urban planning: diverse religious centers may be independent of political centers and their cultural nexus can provide an effective safety net of social support in times of political crisis and power vacuum. The Manchu success in managing a multi-ethnic empire may be an important source of inspiration for the Chinese communist government’s statecraft. Finally, I was saddened by the recent unrest and bloody feud between the Han Chinese and Uyghurs in Urumqi, Xinjiang, in early July 2009. The previous four paragraphs were first written in 2004 and, therefore, preceded the tragic events of mid-2009. References Anonymous. “Zhongguo huanjing wuran fangzhi jishu jinzhan.” Huanjing Shengtai Wang (Environment and Ecology Net). Online edition. http://www.eedu.org.cn/ Article/ShowArticle.asp?ArticleID=6965. Article revised on 1 January 2006. Accessed 14 August 2009.

206

yuehtsen juliette chung

Beck, U. 1992. Risk Society: Towards a New Modernity. London: Sage Publication. British Broadcasting Corporation. http://news.bbc.co.uk/2/hi/asia-pacific/2541431. stm. Posted 4 December 2002 and accessed 22 May 2004. Cao, Min. 2001. “Kangzhan shiqi guomin zhengfu kaifa xibei huodong lunshu.” Renwen zazhi 4: 132–5. China Daily. Online edition. http://www.chinadaily.com.cn/bizchina/2009-07/14/ content_8424912.htm. Accessed 7 August 7 2009. China News. http://www.chinanews.com.cn/2001-09-07/26/120061.html. Accessed 22 May 2004. This news was originally posted 7 September 2001. China ORG.CN. http://china.com.cn/chinese/EC-c/194588.htm. Accessed 22 May 2004. Xinhua News posted this news initially on 26 August 2002. ——. Specified section on the “Develop the West” campaigns and the topic of infrastructure construction. http://www.china.com.cn/zhuanti/115/node_5781722.htm. Accessed 14 August 2009. China Tibet Online. http://english.people.com.cn/90001/90778/90857/90860/ 6677607.html, Accessed 14 August 2009. China Youth Daily. Posted on 18 January 2001. Online edition. http://health.online. sh.cn/gb/content/2003-04/11/content_569373.htm. Accessed 11 April 2003. This webpage is no longer valid. Chinese National Bureau of Statistics. 1998–2008. Chinese Statistics Yearbook 1998– 2008. Beijing: Zhongguo tongji. Chung, Yuehtsen Juliette. 2004. “The ‘Develop the West’ Campaigns and Their Environmental Impacts: The Post-Socialist Condition in China.” Presented at the 56th Annual Meeting of the Association for Asian Studies, San Diego, CA. Dongbei University of Finance and Economics Environment Conservancy Association at http://www.dufe.edu.cn/studentlife/huanbaoxiehui/education/hbzz .htm. Accessed 27 March 2006. Gabriel, Satya, Stephen A. Resnick and Richard D. Wolff. 2008. “State Capitalism versus Communism: What Happened in the USSR and the PRC?” Critical Sociology 34(4): 539–556. Ge, Fei. 2001. “Guonan shengzhong de xibei kaifa.” Zhongzhou Xuekan 1:133–135. Hasan, Rumy. 2008. “Reflections on the Impact upon China’s Polity from the Retreat of State Capitalism.” Critical Sociology 34(4): 575–597. Jia, Yunhe. 1995. “Fazhan minzu jingji, kaifa jianshe bianjiang—Song Yun de gaige sixiang ji qi zai Xinjiang de shijian.” Xibei shida xuebao 32(2): 86–92. Jiang, Hong. 1999. The Ordos Plateau of China: An Endangered Environment. Tokyo: United Nations University. Li, Donghai and Meng Li. 2001. “Xibu dakaifa zhanlue de jingjixue sikai.” Xibei shida xuebao 38(3): 114–8. Li, Yongfang. 1995. “Luelun wodang zai kangri zhanzheng shiqi de duiwai jingji jiaowang.” Henan shehui kexue 4: 18–21. Nanfang Daily. 13 November 2007. Online edition. http://news.sohu.com/20071113/ n253216172.shtml. Accessed 19 August 2009. Pollard, Vincent K. 2008. “Introduction and Overview: Actors, Obstacles and Social Change in European and Asian State Capitalist Societies.” Critical Sociology 34(4): 525–538. PRC State Council Information Office. 1999. Baipishu: Zhongguode shaoshu minzu zhengce Jiqi shijian (White Book: The Policy and Practice of Chinese Minorities). Online edition. http://www.scio.gov.cn/zfbps/ndhf/1999/200905/t307953.htm. Accessed 19 August 2009. Shapiro, Judith. 2001. Mao’s War Against Nature—Politics and the Environment in Revolutionary China. Cambridge: Cambridge University. Sina News Net. 2004. “Zongshu: Shanghai laobaixing tan xibu kaifa.” (Comprehensive discourse: Shanghai folks’ discussion of “Develop the West”). Online edition. http:// news.sina.com.cn/china/2000-3-2/67068.html. Accessed 29 June 2004. The newspaper Shanghai Youth posted this report originally on 2 March 2000.

the post-socialist condition in china

207

——. http://finance.sina.com.cn/g/20070302/10093371339.shtml. Accessed 11 August 2009. Tu, Weiming. 1984. “The Continuity of Being: Chinese Visions of Nature.” Pp. 113–127 in Leroy S. Roumer, ed., On Nature. South Bend: University of Notre Dame Press. Waley-Cohen, Joanna. 1991 Exile in Mid-Qing China: Banishment to Xinjiang, 1758– 1820. New Haven: Yale University Press. Wang, Tao. 2004. “Policy Study on the Financial Support Issue in the West Development of China.” Ruan Kexue 18(2): 51–54. Wynne, B. et al. 1996. Risk, Environment and Modernity: Towards a New Ecology. London: Sage. Yang, Liping. 2003. “1927–1937 nian zhishi fenzi kaifa xibei de zhuzhang.” Qinghai shehui kexue 3: 44–7. Yao, Huiqin and Ren Zongzhe. 2009. Annual Report on Economic Development in Western Region of China (Chinese). Beijing: Shehui kexue wenxian. Zhao, Songrao and Wu Xiaojun. 2001. Xibu kaifa jianshi. Lanzhou: Gansu renmin. Zheng, Shufen. 1999. “Sun Zhongshan jingji jianshe sixiang xintan.” Xinan shifan daxue xuebao 25(4): 116–119. Zhou, Yi. 2002 Xibu da kaifa: qianyan wenti yanjiu. Xi’an: Shanxi renmin.

CHAPTER TEN

STATE CAPITALIST ASPIRATIONS AND THE TWO-STAGE THEORY OF REVOLUTION IN THE PHILIPPINES Vincent Kelly Pollard The privateness of productive private property (especially large-scale enterprises) is often taken for granted. For those concerned with political empowerment, what makes private property private is its ability to elude control by the working classes (Hobson and Tabor 1988:xiii, 309–310, 421–439). But for those who have led communist parties to political power, that interpretation is contentious. Implicitly rejecting it, communist parties vying for leadership in nationalist movements in Asia and elsewhere, typically have advocated a two-stage revolution. The goal of seizing state power is considered sufficient justification to subordinate other demands to it; consequently, working class control of society and government became an ever-receding goal. Limitations placed on gains by Chinese women during the revolutionary period are a case in point (Pollard 2007–2008). The Communist Party of the Philippines (CPP) is the focus of this chapter. Since its founding in 1968, the CPP has advocated a Two-Stage Theory. The CPP looked first to Mao’s China, then to Moscow, and sometimes to both in its efforts to overthrow successive governments of the former American colony in Southeast Asia. And during thirteen and a half years of martial law (1972–1986), the CPP led struggles on behalf of impoverished agricultural workers, indigenous peoples, women, and employed urban workers. Misreading the pulse of the masses in late 1985, a narrow majority of the CPP Politburo’s Executive Committee underestimated changes unfolding on the volatile Philippine political landscape. As a supportive editorial mistakenly predicted in November 1985, “a Marcos victory in the snap polls is a foregone conclusion” (National Democratic Front of the Philippines 1985b:2). To the astonishment of supporters and opponents, the CPP failed to join the military-church-human rights coalition that dealt the final blow to the Marcos dictatorship. And in light of the moral force of utang na loob (‘a deeply felt obligation’) in

210

vincent kelly pollard

Philippine culture, the CPP thereby missed an invitation to join the first post-dictatorship government. Table 1 summarizes four key themes in the Two-Stage Theory of social revolution. Most state capitalist political parties discussed in this book have exercised state power at one time or another. These Marxist-Leninist Table 1. Four Key Themes in the Two-Stage Theory of Revolution Strategic vision

• Little confidence in the ability of the working classes to run society. • In order to achieve national liberation, empowering the working classes to rule for themselves is postponed. One-party • Downplays and postpones activity to create a monopoly of society run by a party controlled by organizapolitical power tions of agricultural laborers, industrial workers, housewives and the rest of the working classes. • Controlling society and administering government. • Monopolizing media organizations and regulating mass communications content that might publicize non-state organizing activity. Social control • Encouraging labor, environmental, women, and religious organizations but maintaining state supervision over them. • Nationalizing productive property (business, industry, communications and sometimes agriculture) in the name of the workers and farmers but ultimately under the control of a small elite. • Consulting the masses to minimize, alleviate and obviate problems. Inspirational • Executive Committee of the Third (‘Communist’) historical International: Stalin’s defense of the nearly fatal antecedents alliance of the Communist Party of China with the Nationalist Party during 1924–1927. • Chinese Communist Movement during the long Civil War of 1927–1949. • Vietnamese communist movement.

state capitalist aspirations

211

parties have expressed a strong preference for single-party rule, even if a handful of other parties—remnants of historic united fronts—have been permitted a circumscribed existence. Examples of formal, limited tolerance of minor political parties occurred in the former People’s Republic of Poland, and are acknowledged in the People’s Republic of China and the Socialist Republic of Vietnam. To the extent that their preference is linked with state capitalist aspirations of revolutionary parties, under what circumstances can that preference be strategically self-defeating? To answer this question, this chapter examines the political and historical conditioning of the CPP’s historic blunder in early 1986. Setting the social and historical context for that blunder, this chapter explains the technocratic proclivities embedded in statecapitalist ideology, organization and leadership that restrained the Party at the crucial moment. Indeed, at the pivotal moment, the CPP was most reluctant to participate in a social and political movement that it had little chance of dominating. Proclaiming his desire to uplift the immiserated Filipino masses, former university lecturer Jose Maria Sison led the Kabataang Makabayan (or ‘Nationalist Youth’) Movement and the Movement for the Advancement of Nationalism in the mid-1960s. Sison visited the People’s Republic of China in 1966 and, again, in 1967. Almost forty years later, he reflected on “the distinct honor of meeting Chairman Mao and of having a photograph taken with him” (Sison 2004:44–45). Together with his comrades, Sison founded the Communist Party of the Philippines on Mao Zedong’s birthday in 1968. The early leadership consisted primarily of radicalized students and junior university faculty members. Sison and a few others had split from the Moscoworiented Partido Komunista ng Pilipinas (PKP). The international context of that split was almost a decade of harsh rhetorical exchanges between Beijing and Moscow. In contrast to the PKP, the ‘Party Building’ section of the CPP’s founding document states, “The People’s Republic of China serves today as a stable base area of all revolutionary peoples now surrounding the cities of the world from the world’s countryside of Asia, Africa and Latin America” (Communist Party of the Philippines 1976[?]/1968:34). The concluding point of the same document’s section on “The National United Front” predicts, “Armed with invincible Mao Tsetung Thought, the Communist Party of the Philippines will surely triumph and the Filipino people under the leadership of the revolutionary proletariat will achieve people’s democracy first and socialism next” (Ibid.:46).

212

vincent kelly pollard

In March 1969, the CPP organized the first fighting units of the New People’s Army (NPA). By 1970, Sison had begun using the narcissistic Spanish nom de guerre Amado Guerrero (‘Beloved Warrior’). He stated in 1970, “At this stage, the universal theory of Marxism-Leninism-Mao Tsetung Thought and the Great Proletarian Cultural Revolution have already had incalculable impact on the current practice of the Philippine revolution” (Guerrero [Sison] 1971/1970:296). Two years after the Party’s strategic abstention from the demonstrations that ended the Marcos regime in 1986, Roberto Pumarado, a pseudonymous Left critic, commented “The armed-struggle strategy was combined with a programmatic commitment to political alliances with the ‘national bourgeois’ component of the capitalist class, considered a potential partner in what Maoists called the ‘bloc of four classes’ ” (Pumarado 1988:9). His reference to the ‘bloc of four classes’ does not imply that the working classes exercised state power to run society in their own interest. Instead, despite including workers and farmers, the ‘bloc of four classes’ blocked such a radically empowering possibility. Guerrero/Sison’s popular English-language orientation text for CPP cadres may have anticipated this criticism: “Only after the national-democratic stage has been completed can the proletarian revolutionary leadership carry out the socialist revolution as the transition stage towards communism” (Guerrero [Sison] 1971/1970:131). Alexander Magno aptly summarizes that orientation as “a fundamentally linear and stagist conception of revolutionary development” (Magno 1988:79). In Table 1 (above) and in the rest of this chapter, this notion of social change is referred to as the Two-Stage Theory of revolution. Empowering the working classes of people to run society in their own interest, in the Two-Stage Theory, is always subordinated to the felt need of not alienating one or another key constituency. In the 1970s, the CPP publicized scornful critiques of the Soviet Union’s “social imperialism” (Guerrero [Sison] 1979/1970:210). Inconsistently, a blind eye was turned towards favored socialist regimes like the PRC. During its early years, the Party avoided public comment on events like China’s opposition to the Bangladeshi national liberation struggle in 1971, Mao and Zhou Enlai’s welcome for U.S. President Richard Nixon while the U.S. was bombing the Democratic Republic of Vietnam in February 1972, and China’s suppression of Tibetan minorities in four provinces of the PRC. Nonetheless, early CPP leaders like Jose Maria Sison and his co-thinkers professed to find true anti-imperialism in China in the late 1960s. State capitalist ideology,

state capitalist aspirations

213

as I argue in this chapter, limited the revolutionary potential of the CPP, despite its advocacy on behalf of impoverished agricultural workers, indigenous peoples, women, and employed urban workers. Fifteen months before his term-limited presidency would have ended, President Ferdinand E. Marcos imposed martial law on September 21st, 1972. He shut down the legislature, muzzled mass communications media (especially the three newspapers most critical of his executive arrogation), had real and imagined political opponents arrested without a warrant, and ordered detainees imprisoned without open trials. Martial law in the Philippines extended Marcos’s tenure (December 30th, 1965-February 25th, 1986) thirteen and a half years beyond its constitutional limit. Initially not a military threat to Marcos, the Communist Party of the Philippines served as a scapegoat in the rationale for martial law. Articulating linkages between the CPP’s antidemocratic leanings and its strategy of ‘people’s war’ for a ‘national democratic revolution’ can be seen in three dimensions: 1) devaluing democratic demands raised by Filipino workers, farmers and other oppressed people not controlled by the CPP—or by oppressed groups protesting against ostensibly socialist or communist governments in China, Vietnam and elsewhere; 2) a reluctance to characterize socialist and communist rulers who control nationalized property and direct centralized planning in terms of their social class; and 3) a vague articulation of the Party leadership’s vision of the future. Comparatively, the CPP’s behavior may also be viewed as a local variation on an international trend. Subsequently, in June 1975, the CPP was jolted by Mao Zedong’s rapprochement with the ‘U.S.-Marcos dictatorship,’ as it was widely referred to in the anti-martial law movement. President Marcos extended a warm handshake to Mao in Beijing and gave diplomatic recognition to the People’s Republic of China while derecognizing the Republic of China on Taiwan.1 In return, Mao agreed to cease occasional shipments of arms to the CPP, and to see that the Communist Party of China would tone down public statements of party-to-party relations. The CPP then shifted its orientation to the USSR. 1 The phrase “Republic of China on Taiwan” acknowledges two facts: 1) the People’s Republic of China does not govern the island of Taiwan; and 2) the government on Taiwan does not claim to be the rightful ruler of “mainland” China, as the PRC is sometimes called.

214

vincent kelly pollard

Following President Marcos’s imposition of Martial law on September 21st, 1972, the CPP and like-minded organizations inaugurated the National Democratic Front (NDF) on April 24th, 1973. The NDF was a more broadly based umbrella resistance organization. In the majorityCatholic Philippines, it also embraced pre-martial law groups like Christians for National Liberation. Three martial law-era imperatives advocated by the April 1973 Preparatory Commission for the National Democratic Front of the Philippines were remarkably similar to demands raised by Eastern European mass movements for democracy in the 1980s and early 1990s: 1) “[W]ork for the establishment of a truly democratic system of representation”; 2) “Fight for the reestablishment of all the democratic rights of the people, such as freedom of speech, the press, assembly, association, movement, religious belief, and the right to due process”; and 3) “Support the national minorities, especially those in Mindanao2 and the mountain provinces, in their struggle for self-determination and democracy” (Quoted in Bayani 1976:51). On November 12th, 1977, a revised NDF program reaffirmed and elaborated these three points (See Pollard 1993:40–41). In the mid-1970s and certainly by 1980, the CPP recoiled from the pro-U.S. implications of the PRC’s “Theory of the Three Worlds” during the final years of the Jimmy Carter Administration (1977–1981) (Ang Bayan 1980:11–13). By the 1980s, the CPP unevenly modulated and then ceased its previously caustic commentary on the USSR (Ang Bayan 1980:11–12). Ang Bayan staff for the Central Committee of the CPP wrote, less than three years before Marcos’s downfall, “Ang Imperyalismong US, na sumusuray sa gitna ng sariling krisis sa pulitika’t ekonomya, ay nag-atas kina Marcos at iba pang papet na diktador na paigtingin pa ang pagsasamantala’t pang-aapi sa mamamayan” (“U.S. imperialism, which is staggering in the midst of its own political and economic crisis, encourages Marcos and other dictator puppets who intensify the harassment and oppression of the people”) (Ang Bayan 1983:13–14). Yet exaggerated perceptions of the PRC’s social services for the Chinese masses still influenced CPP leaders in the mid-1980s (Ang Bayan 1984:14–18), probably because tens of millions of their co-Filipinos lacked basic human services.

2 Mindanao, the southerly second-largest island in the archipelago, has long been home to a majority of Muslims in the Philippines.

state capitalist aspirations

215

At the Party’s high tide during 1983–1985, according to hostile intelligence agencies, CPP-influenced municipalities in the Philippines embraced one sixth of the country’s population. By June-July 1984, the New People’s Army (NPA) was “operating in 62 of 72 of the…..provinces,” according to a report prepared for the U.S. Senate. By mid-1984, the NPA “exceed[ed] the number of operations mounted by the AFP [Armed Forces of the Philippines].” More strategically, the NPA temporarily overcame geographic and linguistic challenges that blocked the spread of earlier revolutionary movements since the end of World War II (U.S. Senate Committee on Foreign Relations 1984:24, 25, 30). Despite its consistent opposition to martial law, the CPP suffered a strategic setback in 1986 when events unexpectedly catapulted Mrs. Corazon C. Aquino to power. Blindsided, the CPP failed to join the winning military-church-human rights coalition whose crescendo of street protests and a military mutiny forced a sudden end to the Marcos dictatorship. Although the 1986 political revolution was neither “antifeudal” nor “anti-imperialist,” it “unleashed a flood of expectations that would be difficult to resist” (David 1986:7). Thus, in a culture where the force of utang na loob (‘a deeply felt obligation’) is palpable,3 the CPP arguably missed a golden opportunity to join the first postdictatorship government of the Philippines. To explain the decision of the decisive narrow majority of the CPP at that crucial moment, what does a state capitalist perspective add to the qualitative explanation of the CPP’s bungling? To what extent did the preference for one-party monopoly of power associated with state-capitalist ideology hold the CPP leadership back? President Aquino’s reaction to the boycott and abstention of the National Democratic Left was one of relief: “ ‘Thank God, they didn’t help. Now I don’t owe them anything,’ ” she said, according to Minister of Information Teodoro ‘Teddy Boy’ Locsin, Jr., in a January 2nd, 1987 interview (Corazon C. Aquino, quoted by Locsin, Jr., in Komisar 1987a:130, 269; compare Locsin, Jr., quoted in Lucy Komisar 1987b). Aquino’s reaction highlights the micro-social dynamics of Philippine values. Thus, in Philippine culture, where the power of ‘a deeply felt obligation’ is commanding, an effective majority of the top CPP 3 Traditionally, utang na loob has been translated as ‘debt of gratitude.’ In English, however, that turn of phrase can have a legalistically encumbered connotation of being liable and in arrears and therefore fails to capture nuances of specific contexts.

216

vincent kelly pollard

leadership underestimated the likely relevance of a basic cultural norm of reciprocity, almost certainly missing an invitation to join Aquino’s diverse cabinet in the first post-dictatorship government (Pollard 2004:69–70). Among Filipino organizations that gave the final collective shove to the Marcos dictatorship during the four-day demonstration at EDSA4 in Quezon City (the largest city in the Metro Manila conurbation), Aquino chose four competing civil, political and military political factions to be represented in her first, post-insurrection cabinet. Foreign researchers occasionally have exaggerated the explanatory power of utang na loob as a paradigm for interpersonal relations among Filipinos. However, as quoted above, in late February, 1986, Aquino explicitly referred to the norm of mutual obligation as she reflected on the diverse political texture of her first cabinet. The election campaign leading up to February 7th, 1986, and the polling and vote counting were marred by terroristic threats against courageous poll watchers, murders, an ineffective boycott by the CPP, and massive vote fraud. At least 25% of votes cast were never counted. A majority of the Batasang Pambansa (National Legislature) voted to certify Mr. Marcos as the winner. Two and a half weeks of imaginative legal and illegal protests ensued. They were overtaken by an armed military mutiny led by Fidel Valdez Ramos and Juan Ponce Enrile during February 22–25, 1986. In turn, the mutiny was protectively surrounded by a large, internationally televised Church-inspired civilian demonstration (Nemenzo 1986:20–21). Thus, Aquino’s accession to power in 1986 followed a failed election. To frame the unusual dynamics in terms expressed earlier by Frances Fox Piven and Richard Cloward, that massive demonstration of up to 1,000,000 Filipinos reflected “a new sense of efficacy” whereby “people who ordinarily consider themselves helpless come to believe that they have some capacity to alter their lot” (Piven and Cloward 1979:4). Angered by the electoral chicanery of the Marcos political machine, Aquino rejected the 1973 martial law-era constitution under which the election had been conducted as the basis for her authority. Unelected, she became President of the Philippines. Rhetorically stepping outside the 1973 martial law constitution under which the election had been held, Aquino had herself sworn in on the basis of the

4

The acronym ‘EDSA’ refers to Epifanio de los Santos Avenue.

state capitalist aspirations

217

four-day ‘People Power’ protest demonstration at EDSA. As she phrased it in her inaugural address, “People Power….today has established a government” (Aquino 1986). This process jeopardized her legitimacy. At the outset of that unstable period, however, the CPP was unable to exploit the legitimacy gap. Instead, it lost members, peripheral supporters and even a hearing among former collaborators. Precision on that distinction highlights the CPP’s lost opportunity to join a de facto provisional government. Until a new Konstitusyon was written and ratified, Aquino’s legitimacy was in question. As she matter-of-factly prefaced her answer to a related question of mine on August 10th, 1995, “If I had been elected ….” Aquino’s acute awareness of the limitations of her unusual pathway to the presidency limited her ability to intervene against Nationalist Bloc opponents of U.S. military bases at the 1986 Constitutional Commission (Pollard 2004:72). Within weeks, she locked out the elected Batasan to prevent it from meeting again. Aquino ruled by decree for seventeen months, i.e., until July 27th, 1987. In 1986, the Two-Stage Theory of social revolution defeated the Communist Party of the Philippines. In contrast to the fortunes of communist parties globally, in the early 1980s, circumstances favored the CPP. The Party was experiencing increases in membership, expanded circles of sympathizers, and increasing influence in the broader movement against martial law. In light of that momentum, how does one explain the Party’s abrupt and unexpected failure to participate in the events that brought a sudden end to the Marcos dictatorship in 1986? In this chapter I summarize—and then offer an alternative to—three standard explanations of the Party’s stunning miscalculation. The lessons are not only of historical interest but remain important today for participants in radical Asian anti-globalization movements advocating radical, ameliorative social change. Each of three competing explanations for the CPP’s failure to contribute to driving Marcos from the presidency in 1986 has a degree of persuasiveness: 1) the Party’s failure to endorse Aquino in what became a massive voter participation in the unexpected (‘snap’) presidential election–two weeks earlier than the massive protest that collapsed the Marcos dictatorship; 2) the strength of anticommunist ideology in the Philippines; and 3) repression under the Marcos government, including the capture and imprisonment of Jose Maria Sison in late 1977. The suggestive explanatory power of these three partial interpretations is incomplete. They denote converging manifestations of an underlying

218

vincent kelly pollard

but unarticulated problem. But they require a different hypothesis, namely, that the CPP leadership’s less-than-total commitment to a radically democratic empowerment of Filipino workers and farmers blocked the way to a better life for the people of the Philippines, thereby understandably undercutting its appeal with Filipinos who might otherwise be attracted to that Party’s banner. Ad hoc theological and conspiratorial interpretations also abounded in 1986. A panel discussion on this topic was sponsored by the Third World Studies Center at the University of the Philippines-Diliman three weeks later. At that event, former political prisoner Fr. Edicio De La Torre observed that popular “Holy Spirit” and “CIA” causal explanations denied the political agency of Filipinos who risked their lives in the demonstration at EDSA (Edicio De la Torre, in De La Torre, Lambino and Magno 1986:5–6). Shortly after Marcos’s announcement, in November 1985, that a presidential election would be held in the following year, a narrow majority of the Executive Committee of the CPP’s leading Politburo voted not to support candidate Aquino in the February 7th, 1986 elections, advocating abstention from voting (Caouette 2004:420–342). In what ways did CPP abstention in late February, 1986, reflect core values of a narrow majority of Party leaders who carried the day? Answering this question requires reframing the range of perceived options opening up during the 1986 Filipino EDSA uprising that toppled the dictator Marcos. During 1982–1986, an internal CPP debate re-energized an age-old controversy in radical Philippine politics over how much to emphasize above-ground, legal organizing. According to James B. Goodno, who interviewed many CPP leaders afterwards, “distrust of the electoral process finds roots in the early history of the CPP” (Goodno 1991:160). And in the midst of a later debate over strategy and tactics, the NDF Secretariat issued a “draft program” on January 1st, 1985. The NDF draft program reiterated a series of democratic demands, including several that addressed the conditions of oppressed nationalities in the Philippines (National Democratic Front 1985a:13–14, 21–22, 24 and 29). In public CPP statements in the early 1980s, the Party’s lack of verbal support for the democratic rights of militant workers and farmers in Poland, other Soviet Bloc countries and China, points to the top leadership’s unwillingness to criticize Beijing or Moscow for suppressing the democratic rights of national minorities. The CPP’s fraternal

state capitalist aspirations

219

silence set a precedent for its own foreign policy. While the CPP was urging Filipino workers, farmers and students to fight to free the Philippines from foreign military and economic domination, one might wonder what prevented the CPP leadership from sparing a few public words of support for their international counterparts fighting against Moscow or Beijing for ostensibly similar goals. During 1985, when the Communist Party of the Philippines was selectively, if belatedly, airing public internal criticisms, one pseudonymous “Ka” (“Comrade”) Sergio wrote a letter titled “Birahin din ang Unyon Sobyet!” (‘Also Sharply Criticize the Soviet Union!’) to the editor of Ang Bayan. In Ka Sergio’s letter, the author criticizes Ang Bayan for the Party publication’s one-sided critique of imperialism, that is, for its failure to subject the Soviet Union’s international behavior to the same criteria used in its analysis of the United States. Placed on the defensive, the editors awkwardly replied that the CPP really did oppose the Soviet Union’s invasion of Afghanistan, further emphasizing that Ang Bayan’s editorial focus had been on the United States’ imperialism. The editor promised a fuller explanation at an unspecified future date (Sergio 1985:18). Desperate to save state capitalism in the Soviet Union, Mikhail S. Gorbachev, General-Secretary of the Communist Party of the Soviet Union (1985–1991), introduced glasnost (political “openness”) and perestroika (economic “restructuring”). The CPP leadership did not greet this policy shift with joy.5 The CPP never rejected the underlying Stalinist/Maoist notion of a privileged communist party ruling over the masses, in spite of the masses, even if consulting the same people in whose name it claimed to rule (see Table 1, above). As Julian Banaag of the CPP Central Committee’s Political Bureau responded in a December, 1987, interview, subsequently reprinted in the Party’s theoretical organ: “Our theoretical guide has always been Marxism-Leninism, an important

5 Later, during a November 1986-January 1987 cease-fire, CPP leaders Saturnino Ocampo and Antonio Zumel told Katherine Graham of the Washington Post that Sandinista-led Nicaragua might be emulated by Filipino revolutionaries (Richburg 1991:10). At the time, however, the Sandinistas’ record for respecting the democratic rights of labor unions and opposition parties in Nicaragua was not exemplary. And shortly before centrifugal tendencies shattered the USSR, the tone of the CPP leadership began shifting from neutrality to cautious friendliness during the very period when the Soviet Union’s occupation of Afghanistan continued (Sison 1989:183; Rocamora 1994:20–21).

220

vincent kelly pollard

part of which are Comrade Mao’s contributions based on his summingup of the Chinese people’s revolutionary practice” (Communist Party of the Philippines, Ang Bayan Editorial Staff 1988:34). Effective leadership includes decisive responsiveness to the unexpected. The expulsion of Marcos in 1986 might have led to deeper social transformations if the CPP or some other group had been agitating among the EDSA demonstrators not only for Marcos’s resignation but also for immediate land reform, demilitarization of the countryside, full employment, labor union rights for workers, cancellation of the foreign debts, and withdrawal from all three military treaties with the US. That instantly would have transcended vague promises made by Corazon Cojuangco Aquino, the Roman Catholic Cardinal, Jaime Sin, General Fidel Ramos, and Minister of Defense, Juan Ponce Enrile. More concretely, radicalized Filipinos looking for these kinds of changes would have had the opportunity to upset Aquino’s timetable by moving up the date for a general strike against the Marcos regime—then tentatively scheduled for February 26th, 1986. Aquino, or whoever else might have acceded to power against such a radicalized backdrop, would have been under extreme pressure to implement some of these demands listed above. Instead, Aquino avoided incurring ‘a deeply felt obligation’ to organizers of such a strike. Yet for a majority of top CPP leadership, abstention from the massive street rebellion was a logical corollary of the Party’s electoral boycott. The unfriendly, politically tone-deaf manner in which the CPP carried out its Don’t Vote boycott policy prior to the February 7th, 1986, election between President Marcos and Mrs. Corazon Cojuangco Aquino, was arguably more counterproductive than the formal position (the election boycott). The divisive bickering split militant national federations whose constituent member-organizations were influenced by the CPP-led National Democratic Front. For example, in the internal debates conducted by the national women’s federation GABRIELA, over how to relate to the ‘snap election,’ GABRIELA voted to take no position as a national organization, then to support the boycott, then reverted to taking no stand at all, while local affiliates were free to take a different position (Angeles 1989:339–334; compare San Juan 1986:159–175). The CPP’s electoral sectarianism presaged its calamitous abstention from the pivotal four days of protest in late February, 1986. However, conceding that voting would not lead to lasting social improvements

state capitalist aspirations

221

in the Philippines, reveals the source of the Party’s fundamental error elsewhere. To find out where, one must also ask to what extent the CPP’s inability to carry on a collaborative conversation with non-boycotting Filipinos reflected hesitation over whether and how to unite with people who had differing views and, more importantly, who were too numerous to dominate politically (Abinales 2001; Weekley 1996; Kerkvliet 1996). With credibility gained from thirteen and a half years of resistance to martial law, being perceived as a harbinger of social revolution did not necessarily harm the CPP’s reputation among all sectors of Philippine society. The Communist Party of the Philippines (CPP) and its New People’s Army had been pursuing a struggle against Marcos’s martial law regime to liberate the Philippines from imperialism, the landlord system, and other oppressive institutions. What harmed the Party was its failure to speak to crucial audiences that would have been available if the CPP had been sharing the same risks as the EDSA demonstrators. In February, 1986, the CPP failed to give leadership in one of the most momentous rebellions in national politics since the Philippine Revolution of 1896. My critique of the CPP’s lack of leadership in 1986 distinguishes, on the one hand, between opportunities created by Marcos’s exit and, on the other hand, the frustrated hopes of many Filipinos. Thus, they briefly had within their own hands a precious chance to move collectively toward even more radical reforms, for example, in the area of land tenure. In late February, 1986, for several days, weeks or months, an opportunity emerged from the People Power Revolution triggered by a military mutiny and expanded by a Catholic Church-led demonstration of urban activists. Yet no correspondingly perceptive, decisive and powerful social force took advantage of this opportunity to implement a social revolution–neither the CPP nor the ‘New’ Armed Forces of the Philippines, the Roman Catholic bishops, the Basic Christian Communities—not to mention the President of the Philippines, a member of one of the largest landowning families in the country. Within less than three months, the CPP’s Central Committee published a self-assessment in its journal Ang Bayan. In that evaluation, it acknowledged sectarian errors (Communist Party of the Philippines 1987/1986:383–386). But on May 31st, 1986, “the Executive Committee of the CPP,” according to political analyst Alexander Magno, reversed course yet again, issuing “a memorandum defining the boycott error as not decisive” (Magno 1988:86).

222

vincent kelly pollard

What are the technocratic temptations of nationalized property under one-party control? If the Communist Party of the former Soviet Union (CPSU) long ago transformed itself into a dictatorial state capitalist class, how did the leadership of the Communist Party of the Philippines assess its implications for ordinary Filipinos? If the Soviet Union’s privileged managerial nomenklatura functioned like a capitalist class6 in relation to the rest of society, if the workers had no organizational means of directly controlling this group of people, and if the one-time Soviet Union’s primary differences from capitalism in the West lay in the collectivity of its rulers, their attempts at planning and their public self-descriptions, why not just call it state capitalism? If the CPSU led the government of the USSR which, in turn, controlled most of the capital and was not controlled by organizations of the working classes, then for the CPSU to call itself socialist, thinly veiled a commonality of perspectives and dynamics with the capitalist slavery it professedly detested. This interpretation challenges claims that the top leadership of the CPP was committed to enabling self-rule by the masses of Filipino people. Supplementing three prominent (and partly effective) explanations of the CPP’s failure to participate in the 1986 People Power Revolution, in this chapter I have articulated linkages between three crucial weaknesses of widely publicized leaders of the Communist Party of the Philippines. These vulnerabilities were threefold: 1) devaluing of democratic demands raised by groups of people outside the Party’s control in late 1985 and early 1986–or by people who are resisting the control of socialist governments elsewhere; 2) reluctance to characterize the elites who have controlled the nationalized property and attempted the centralized planning in socialist and formerly socialist countries; and 3) a tendency to avoid reconsideration of a generally vague socialist vision of its preferred future. Earlier in the first year of the martial law period (1972–1986), the CPP leadership organized a Party-dominated National Democratic Front (NDF). In March 1969, the NDF issued a series of twelve demands. Of these, four called for specific reforms while another four made more broadly radical demands. Two items were instrumental, focusing on how to win those demands and reforms. Most importantly 6 The Soviet Union’s nomenklatura may be defined as the “informal elite group….. from which all important political posts were appointed and which comprised the establishment” (Conciliation Resources n.d.).

state capitalist aspirations

223

for present purposes, Point #3 of the same 1985 NDF document calls for “Establish[ing] a democratic coalition government and a people’s democratic republic” (National Democratic Front 1985:30). Based on the CPP leadership’s admiration for the People’s Republic of China, top Party leaders’ lack of sympathy for workers’ uprisings against ruling communist parties elsewhere, and for internal criticism of CPP leaders’ dictatorial tendencies, one must infer that Point #3 was not intended to place Filipino workers in the position of running society. Since the CPP was not granted a seat on the first post-dictatorship cabinet, this framework of analysis facilitates understanding who were the actual winners in the People Power uprising of 1986. These overlapping cohorts of winners and losers may be further subdivided into several groupings. The first group of political actors are the outright winners—candidate Corazon Cojuangco Aquino, her closest advisors, officers of the Armed Forces of the Philippines, especially the Ramos-Enrile Reform the Armed Forces Movement (RAM). Joining the top tier of winners were Cardinal Sin, other conservative leaders of the Roman Catholic Church, conservative business people not in the Marcos crony network, and those Filipinos directly affected or offended by human rights violations under Marcos, particularly those who believed these abuses would decrease if Aquino were President. Finally, those Filipinos who simply wanted an end to the Marcos dictatorship and who desired a return to a political system with an improved version of the pre-martial law constitution considered themselves winners, as well. Since the NDF-inspired phrase ‘U.S.-Marcos dictatorship’ resonated beyond the communist milieu, and after supporting President Ferdinand Marcos (December 30th, 1965-February 25th, 1986) until late in his tenure, the U.S. White House, Departments of State and Defense, considered themselves lucky that Marcos left before the Philippines became communist. Despite misgivings, another group of Aquino’s supporters temporarily regarded themselves as winners before becoming disillusioned in Aquino. This diverse group included those who wanted to see an end to prolonged civil wars and those who desired greater respect for human rights and either hoped that Aquino would do something about these issues or who believed that she could be pressured to act. Among these were Filipinos who believed— incorrectly—that Aquino was opposed to continuing the Military Bases Agreement with the U.S. past 1991 (after that date, renewal was not automatic).

224

vincent kelly pollard

The most prominent losers included the “conjugal dictatorship” (Mijares 1976) of Ferdinand Marcos, co-dictator Imelda Marcos, and several of Marcos’s cronies (corrupt political and business partners). Nonetheless, many of those former cronies would fairly rapidly reappear and prosper in business, government and education during the Aquino Administration (1986–1992). Other political supporters of Marcos only experienced temporary set-backs in their careers, returning to prominence by the mid-1990s. The CPP missed the best chance in its history for sharing leadership of mass political action. After thirteen and a half years of organizing against the Marcos dictatorship, the CPP leadership looked irrelevant. For its abstention, the Party’s influence plummeted among non-CPP activists. Others mistrustful of the CPP, desirous of fundamental solutions to deep-seated social and political problems in the Philippines but who were unable to pressure Aquino to initiate genuine land reform, felt betrayed by her. Filling part of the leadership gap on the Left, the Nuclear Free-Philippines Federation, the activist women’s federation GABRIELA and affiliated political networks, led a successful campaign to rewrite the new constitution and, a few years later, to reject a new Military Bases Agreement with the United States (Pollard 2004:69–117). Thus in a social and political culture respecting norms of ‘a deeply felt obligation,’ the Communist Party of the Philippines thereby failed to become part of the diverse first post-Marcos coalition government in the Philippines. As outlined above, three conventional, if incomplete, explanations for the CPP’s failure have merit and should not be dismissed out of hand. These are as follows: 1) the ineptly executed CPP boycott of the February 7th, 1986 election; 2) the lingering and lasting force of religiously-driven and U.S.-supported anticommunist ideology; and 3) overt and covert government oppression of the CPP and other radical political and social forces. These three explanations emphasize necessary but not sufficient conditions for explaining the outcome (Pollard 1993). Aggravating the cumulative effect of these three contextual variables on the CPP’s abstention were the Party’s technocratic values, especially its preference for a one-party monopoly on political power. Associated with the CPP’s state capitalist perspective, these values rendered the effective leadership reluctant to participate in a popular revolt that it had little chance of controlling. Thus, while critics of the Party prefer to condemn the Party’s pre-election boycott tactics, its refusal to

state capitalist aspirations

225

participate openly in the street-level activism that brought the Marcos dictatorship to its end, reveals more about CPP leadership’s limited vision. Even after rebounding in the mid-1990s, a resurgent CPP and its supportive political periphery have not yet confronted the Party leadership’s state capitalist aspirations. Sooner or later, local, national and regional reactions to U.S-led globalization will force sharper rebellions than has been the case in recent years. From all of this, one may infer that the organizing efforts of organizations that eschew the tantalizing symbols of state capitalism may have a longer-term impact. One party, one country and one devastatingly mishandled crisis do not clinch a broader argument. To establish the degree to which a central preference for one-party monopoly on power limits leaders’ decisional intelligence, this chapter’s analysis also suggests the need for comparative studies of decision-making by would-be revolutionary parties with state capitalist aspirations when confronted by large, powerful and unexpected protests against tyranny. References Abinales, Patricio N. 2001. Fellow Traveler: Essays on Filipino Communism. Quezon City: University of the Philippines Press. Ang Bayan Staff. 1980. “Nasasangkot ang Masang Pilipino sa Paghahanda ng E.U. sa Gera” [“Filipino Masses Complain about U.S. War Preparations”]. Ang Bayan, Tomo XII, Bilang 4 (Pebrero 29 [29 February]):11–13 ——. 1983. “Ang Imperyalismong US, na sumusuray sa gitna ng sariling krisis sa pulitika’t ekonomya, ay nag-atas kina Marcos at iba pang papet na diktador na paigtingin pa ang pagsasamantala’t pang-aapi sa mamamayan” [“U.S. imperialism, which is staggering in the midst of its own political and economic crisis, encourages Marcos and other dictator puppets who intensify the harassment and oppression of the people”]. G:13–14 Ang Bayan, Oktubre. ——. 1984. “Paggunita sa Rebolusyon Paglaya ng Tsina” [“Remembering China’s Revolution and Liberation”]. Ang Bayan, 14–18. Oktubre. Angeles, Leonora. 1989. “Feminism and nationalism: The Discourse on the Woman Question and the Politics of the Women’s Movement in the Philippines.” M.A. thesis, University of the Philippines-Diliman. Aquino, Corazon Cojuangco. 1986. “Inaugural Address.” 25 February. . Bayani [pseud.] 1976. “What’s Happening in the Philippines/ Background and Perspectives on the liberation Struggle.” Far East Reporter [New York]. 1–56. Caouette, Dominique. 2004. “Persevering Revolutionaries: Armed Struggle in the 21st Century, Exploring the Revolution of the Communist Party of the Philippines.” Ph.D. dissertation, Cornell University. Communist Party of the Philippines, Ang Bayan Editorial Staff. 1988. The Filipino People Will Triumph! Conversations with Filipino Revolutionary Leaders. English ed. N.p.: Central Publishing House. Communist Party of the Philippines, Central Committee. 1987/1986. “Party Conducts Assessment, Says Boycott Policy Was Wrong,” reprinted in Daniel B. Schirmer and

226

vincent kelly pollard

Stephen Rosskamm Shalom eds., The Philippines Reader: A History of Colonialism, Neocolonialism, Dictatorship, and Resistance. Boston: South End Press. Selection 11.6:383–386 [May 1986]. Communist Party of the Philippines, Congress of Re-establishment. 1976[?]/1968. Rectify Errors and Rebuild the Party. First published, 1968. London: Filipino Support Group. Conciliation Resources. N.d. “Political Glossary.” . David, Randolf S. 1986. “Theorizing and Living the Transition: The Aquino Government’s First Seven Months.” Kasarinlan 2(2):5–14. 4th Quarter. De la Torre, Edicio, Antonio Lambino and Alexander R. Magno. 1986. “The February Revolution: A New Political Phase or a Return to Pre-Martial Law Politics.” The Philippines in the Third World Papers. Series no. 42. April. Goodno, James B. 1991. The Philippines: Land of Broken Promises. London, UK and Atlantid Highlands, New Jersey: Zed Books Ltd. Guerrero, Amado [Jose Maria Sison]. 1971. Philippine Society and Revolution. First published, 1970. Manila: Pulang Tala Publications. ——. 1979/1970. Philippine Society and Revolution. 3rd. ed. Oakland: International Association of Filipino Patriots. Hobson, Christopher Z., and Ronald D. Tabor. 1988. Trotskyism and the Dilemma of Socialism. Contributions in Political Science no. 215. New York: Greenwood Press. Kerkvliet, Benedict J. Tria. 1996. “Contemporary Philippine Leftist Politics in Historical Perspective.” Pp. 9–27 in Patricio N. Abinales ed., The Revolution Falters: The Left in Philippine Politics After 1986. Southeast Asia Program Series Number 15. Ithaca, New York: Southeast Asia Program Publications, Cornell University. Komisar, Lucy. 1987a. Corazon Aquino: The Story of a Revolution. New York: G. Braziller. ——. 1987b. Papers. Ronald Reagan Library. Simi Valley, California. Magno, Alexander R. 1988. “The Filipino Left at the Crossroads: Current Debates on Strategy and Revolution.” Marxism in the Philippines. 2nd ser. 6–95. Mijares, Primitivo. 1976. The Conjugal Dictatorship of Ferdinand and Imelda Marcos. San Francisco: Union Square Publications. National Democratic Front, Secretariat, Drafting Committee. 1985a. Program of the National Democratic Front of the Philippines. [Manila?] 1 January. National Democratic Front. 1985b. “Preparing for the Snap Polls.” Editorial. Liberation 13(6):2. November. Nemenzo, Francisco. 1986. “A Season of Coups: Military Intervention in Philippine Politics.” Diliman Review 34(5–6):1, 16–26. Piven, Frances Fox and Richard Cloward. 1979. Poor People’s Movements: Why They Succeed, How They Fail. New York: Vintage Books. Pollard, Vincent K. 1993. “Democratizing the Philippine Revolution: Squaring the Circle for the Communist Party of the Philippines.” In Gary Ostrick ed., Conference Proceedings [School of Hawaiian, Asian, and Pacific Studies, University of Hawai’i at Mānoa]. 38–49. ——. 2004. Globalization, Democratization and Asian Leadership: Power Sharing, Foreign Policy and Society in the Philippines and Japan. Aldershot, Hants, UK: Ashgate Publishing, Ltd. ——. 2007–2008. “Marriage, Children, and Chinese Law: Transformation and Diversity During War and Revolution.” E-ASPAC: An Electronic Journal in Asian Studies. . ——. 2008. “Introduction and Overview: Actors, Obstacles and Social Change in European and Asian State Capitalist Societies.” Critical Sociology 34(4):525–538. Pumarado, Roberto. 1988. Philippines: Reform or Revolution? San Francisco: Socialist Action.

state capitalist aspirations

227

Richburg, Keith B. 1991. Reform or Revolution: The Aquino Government and Prospects for the Philippines. Special Report. Honolulu: East-West Center, September. Rocamora, Joel. 1994. Breaking Through: The Struggle within the Communist Party of the Philippines. Manila: Anvil Publishing, Inc. San Juan, Epifanio. 1986. Crisis in the Philippines: The Making of a Revolution. South Hadley, Massachusetts: Bergin & Garvey. Sergio, Ka [nom de guerre]. 1985. “Birahin din ang Unyon Sobyet!” (“Also Sharply Criticize the Soviet Union!”). Ang Bayan, 18. Hulyo. Sison, Jose Maria [with Rainer Werning]. 1989. The Philippine Revolution: The Leader’s View. New York: Crane Russak. Sison, Jose Maria [with Notchka Rosca]. 2004. Jose Maria Sison: At Home in the World—Potrait of a Revolutionary: Conversations with Ninotchka Rosca. 1st ed. Greensboro, North Carolina: Open Hand Publishing, LLC. United States Senate Committee on Foreign Relations. 1984. “The Situation in the Philippines.” Staff Report Prepared for the Committee on Foreign Relations. Frederick Z. Brown and Carl Ford. 98th Congress, 2nd Session. Committee Print S Prt. 98–237. Washington, D.C.: United States Government Printing Office. Weekley, Kathleen. 1996. “From Vanguard to Rearguard: The Theoretical Roots of the Crisis of the Communist Party of the Philippines.” Pp. 28–59 in Patricio N. Abinales ed., The Revolution Falters: The Left in Philippine Politics After 1986. Southeast Asia Program Series Number 15. Ithaca, New York: Southeast Asia Program Publications, Cornell University.

INDEX “Negro Question” 66 “one-man management” 139 “Russian Question” 9, 39, 66, 77, 78 Abern, Martin 69 Against the Current 78 Agrarian capital 92, 105, 106 Alienation 54, 139, 155 All-China Federation of Trade Unions 135 Ancient class structure 30, 31, 34, 121 Arendt, Hannah 66 army 58, 60, 100, 119, 187, 192, 212, 215, 221 Asian financial crisis (1997–8) 142 Attorney General’s List 76 Beck, Ulrich 185 Beijing 138–140, 155, 165, 170, 174, 176, 187, 196, 211, 213, 218, 219 Bolsheviks 3, 48 Bombay Plan 82, 84, 88–90, 96 Bonapartism 70 Bourgeoisie 9, 13, 70, 72, 75, 93, 94, 98, 111, 113, 177 Brezhnev, Leonid 52 brick-kiln 146 Bureaucratic Collectivism 72, 76, 78 Burnham, James 5, 73, 74 Canada 5, 6 Cannon, James 69, 71 Capital accumulation 10, 29, 30, 32, 83, 104, 111–113, 121, 124, 125, 131, 153, 157, 161 Capital Iron and Steel 139 Capitalism 1–16, 21–31, 33–37, 39–49, 51–53, 55, 57–59, 61, 66, 67, 69, 70, 72–76, 78, 82–91, 93–99, 104–108, 110–114, 119–121, 124, 128–132, 135, 138, 148, 151–154, 159, 162, 167, 172, 175, 176, 179–181, 183, 184, 186, 206, 219, 222, 225 As class structure 21, 22, 27, 34, 35, 37 Corporate form 119 non-capitalist class structures 21, 23, 24, 42, 108

Private form 23, 33, 131, 159 State form 21, 25, 26, 33, 63 Varying forms 1, 6, 7, 13, 21, 23–25, 36, 42, 57, 58, 60, 65, 70, 74, 84, 86, 91, 94, 110, 112, 114, 120, 131, 159, 160 Capitalist exploitation 29, 128 Carnegie Corporation 65 Caste 81, 85–87, 91–95, 98, 101, 105–107, 110–115 Central Intelligence Agency (CIA) 218 Chekhov, Anton 46, 63 China, Peoples Republic of 2, 3, 7–14, 21, 25, 67, 77, 101, 116, 119–121, 125–131, 135–139, 141–147, 151–157, 159–171, 173–179, 183–187, 189–193, 195, 197–203, 205, 209–213, 218, 223, 225 Agriculture 204 Bureaucracy 121, 125–127, 170, 175, 179 Communes 121, 122, 123, 125, 177 Communist party (CPC) 10, 12, 119–124, 126–130, 132, 135, 155 Enterprises in Capitalist 127–130 Feudal 21, 23, 24 Private 178, 180 State 162 Township and Village 201 Maoists 86, 100, 125, 127, 128, 152, 153, 157, 161, 174, 219 Modernization 184 northeast 142, 147 Chinese Communist Party 10, 12, 119–124, 126–130, 132, 135, 155 15th Congress 141 Ciliga, Anton 69, 72, 73 Class 2–9, 11–13, 16, 21–38, 42–44, 46–49, 51–62, 66–68, 70–76, 78, 83–87, 90–115, 119–128, 131, 132, 135, 136, 139, 148, 152, 153, 156, 159, 177, 178, 180, 185, 203, 209, 210, 212, 213, 222 Analysis/approach 22, 26, 28, 124 Positions 23, 28, 29, 121, 124, 126, 128 Processes 26, 28, 34, 123, 126

230

index

Class structures 9, 21–25, 27, 30, 31, 34, 35, 37, 38, 66, 120–124, 126 Exploitative 23, 31 Cold War 1, 4, 16, 25, 26, 32, 39–41, 65, 130 collective agreements 145, 147 collective bargaining 91, 99, 102, 145 Collective farms 31, 34, 37, 38, 54 Commodity 4, 22, 24, 41, 44, 126, 131 Communes (see China) Communism 3, 8, 11, 16, 19, 21, 23, 25–29, 31, 33–38, 64, 66, 67, 76, 77, 119, 121–123, 125, 127, 129, 131–133, 149, 195, 206, 212, 225 End of 21 “Primitive” 23 War communism 34 Communist 2, 4–7, 10–18, 21, 23, 26, 28, 31, 32, 34, 35, 37, 38, 56, 64, 66–69, 71, 76, 77, 79, 90, 91, 96, 97, 100, 102, 119, 125, 130, 135, 152, 155, 160, 169, 173, 177, 178, 182, 186, 192, 193, 195, 205, 209–211, 213, 217, 219–227 Communist League of America (Left Opposition) 69 Communist Party 4, 5, 10–12, 14, 15, 26, 28, 32, 66–69, 71, 76, 77, 79, 119, 130, 135, 155, 160, 173, 177, 178, 209, 210, 211, 213, 217, 219–222, 224–227 Conditions of Existence 22, 23, 129 corruption 47, 67, 68, 125, 170, 178, 191 Council of Ministers (COM) 28–34, 121, 126 Versus State Council (China) 121 Council, State 121–123, 126–128, 184, 194, 195 Versus Council of Ministers (USSR) 121 Cuba 3, 6, 18, 21, 25, 67, 77 Cultural Revolution, 1966–76 11, 125, 126, 136, 152, 154, 155, 157, 160, 180, 193, 212 Red Guards 136, 138, 188 Danwei System 122, 123 Degenerate workers state 49 Democracy 9, 10, 67–69, 77, 83, 100, 112, 136, 138, 142, 154, 211, 214 Democracy movement, Chinese 136, 138 in 1989 138 Deng Xiaoping 131, 152

Deutscher, Isaac 69 Development campaign 185, 191, 198, 199, 203, 204 Development Planning 86, 88, 106, 107, 112, 195 Dewey, John 77 Djilas, Milovan 6, 76 Dodge Revolutionary Union Movement (DRUM) 75 dual track economy 179 Dunayevskaya, Raya 4–6, 74, 75 Economic 4–12, 15–18, 21, 22, 25, 27–32, 34–36, 38, 39, 41, 44–51, 55, 58, 60–64, 66, 68–70, 72–76, 81–86, 88–91, 93–101, 103–120, 123–125, 127–133, 138, 141, 142, 144, 151–153, 155, 156, 160, 161, 163, 168–170, 172, 174–182, 184–186, 195, 198–201, 203–207, 214, 219, 225 backwardness 46, 63, 113 liberalization 81–84, 93, 94, 95, 98, 100, 104, 105, 110, 111, 115, 118, 176 Economy 3, 4, 6, 7, 9, 12, 13, 16–18, 24, 28, 29, 33, 35, 38–40, 42, 46, 47, 49–51, 53, 55, 60, 64, 66, 68, 72, 74, 75, 81–83, 85–91, 93, 94, 100, 103, 104, 106, 111, 115–120, 129, 132, 133, 135, 137, 139, 151–155, 157–165, 168, 170–174, 176, 182, 184, 185, 190, 191, 195, 200 mixed 6, 9, 82, 93, 116 Employers 22, 23, 28, 61, 102–104, 121, 145–148 Employment 12, 50, 61, 99, 103, 121, 127, 129, 131, 132, 135, 137–139, 142–144, 146, 147, 169, 176, 220 Enterprises 3, 6, 9, 10, 22, 24, 25, 27–33, 36, 55, 62, 74, 75, 120–122, 125–130, 138–141, 145, 152, 155, 158–160, 162, 164, 167, 171–173, 176–178, 180, 183, 188, 197, 200, 201, 209 Capitalist 24, 25, 28, 30, 32, 36, 74, 120, 127–130 Feudal 24 Industrial 27–29, 31, 120, 127 Private 178, 180 State 30, 33, 55, 162 environmental realism 13, 14, 186, 195 environmental risks 185 equality 58, 156, 161, 195, 205

index ethnic region 194 Exploitation 8, 9, 13, 29, 39, 42–44, 49, 52, 54, 58, 61, 73, 74, 81, 94, 107, 112, 120, 128, 131, 136, 137, 171, 184, 191, 204 exploiters 29, 138 exploited 13, 29, 42, 55 Facing Reality 75 Factory Director Responsibility System 138 Fascism 70, 73, 75, 76 Feudalism 11, 21, 22, 34, 42, 112, 119–121, 124, 126, 128, 153 Abolition in 1861 (USSR) 34 As class structure In China 11, 21, 119–121, 124, 126, 128, 153 State form 11, 21, 22, 42, 128 Fortune 500 145 France 6, 26, 45, 151, 216 Gansu 170, 183, 184, 187–189, 192–194, 196, 201, 202 Germany 3, 6, 26, 45, 65, 66, 71, 73, 165, 189 globalization 1, 10, 82, 84, 85, 87, 94, 95, 97, 98, 108, 115, 128, 185, 217, 225 Gold Standard 47 Gorbachev, Mikhail 5, 58, 68, 219 Gosplan 10, 29, 30 Governance 9, 82, 83, 100, 101, 109, 114, 185, 189, 195 gradient development 185, 195 Great Leap Forward 125, 154, 155, 157, 160, 171, 180, 193, 203 Great Proletarian Cultural Revolution 125, 126, 212 Guangdong 146, 155, 161, 163, 170, 175, 196, 203 Gulag 56 Guo Haitao 145 Han Chinese settlement 186, 194 Harrington, Michael 78 Harvard Russian Research Center 65 Havel, Vaclav 56 Hitler, Adolf 66, 71, 73 Howe, Irving 76 Hu Jintao 145 Huawei 146 Hukou System 122, 171

231

Hundred Flowers campaign (1956–7) 140, 147 Hungarian Revolution 66 independent 12, 58, 62, 70, 76, 78, 107, 135, 136, 139–142, 144, 146, 147, 155, 156, 159, 170, 171, 172, 175, 205 Independent Socialist Club 78 Independent Socialist League 76 Industrial Disputes Act 99, 102 International Labour Organization 141 International 1, 46, 48, 50, 51, 63, 69–71, 77, 85, 88, 92, 94, 112–114, 129, 132, 141, 142, 144, 145, 160, 161, 165, 167, 169, 170, 173, 174, 187, 189, 192, 197, 201, 210, 211, 213, 216, 219 Fourth 69, 70 Iron Curtain 65 Iron-rice bowl 124, 160 James, C.L.R. 3, 5, 6, 74, 75 Jiang Zemin 141, 144, 198, 199 “three represents” theory of 144 Jilin 147, 196 Johnson-Forest Tendency 74, 75 Keynesian Economics 24 Khrushchev, Nikita 63 Kluckhohn, Clyde 65 Labor Contract Law, 2007 135, 145–147 Labor Notes 78 Labor 2, 3, 5, 6, 8, 11, 12, 22–24, 27–30, 47, 51, 54, 56, 58, 73–75, 84, 86–88, 90–92, 94, 96, 97, 99, 101–105, 108, 113, 115, 119–123, 126–129, 131, 135–147, 159, 161, 165, 171, 180, 190, 203, 210, 219, 220 law 99, 101–104, 108 market 103, 126–128 migrant workers process 54, 56, 86, 90, 91, 92, 94, 96, 99, 115, 142 Productive relations 6, 74, 84, 86, 92, 99, 103, 136 unrest 137, 143, 144 lay-offs 138, 141–143, 145–147 League of Revolutionary Black Workers 76, 78 Left Opposition 69 Left Socialist revolutionaries 48 Legal relations 44 legal system 22, 30, 44

232

index

Lenin, V.I. 1, 3–5, 14, 26, 34, 48, 49, 52, 68, 186, 210, 212, 219 Liaoyang 142, 143 living standards 32, 33, 124, 138, 152, 157, 171, 176–178 Luxemburg, Rosa 68, 72 Macdonald, Dwight 73, 74 Managerial Revolution 73 Manchu 187, 188, 205 Mao 10, 11, 77, 119, 125–128, 136, 138, 144, 151–157, 160, 179, 193, 198, 200, 203, 209, 211–213, 220 Maoist 4, 86, 100, 124–128, 152, 153,161, 174, 212, 219 Market imperfections 41 Markets 7, 8, 22, 25, 29, 30, 34, 37, 41, 44, 47, 63, 81, 85, 92, 94, 96, 109, 115, 126, 127, 129, 130, 131, 153, 159, 167, 173 Administered 22, 115, 153 Private 22, 34 Marx, Karl 1, 2, 5, 7, 8, 11, 13, 14, 22, 23, 26, 28, 29, 41, 53, 70, 74, 75, 86, 96, 97, 113, 127, 153, 186 Marxism 17, 19, 38, 55, 63, 72, 79, 132, 212, 219, 226 May Fourth Movement 142 middle class 85, 93, 98, 100, 101, 107, 109, 111, 112 Military competition 8, 12, 13, 45, 51, 151, 153, 157, 179 Modern Enterprise System 140 Modernization 14, 91, 92, 124, 125, 130, 131, 161, 162, 184, 185, 190, 193, 204 Murphy, Kevin 48–50 Nehru-Mahalnobis model 82, 84, 89 New Class 43, 72, 73, 76 New Deal 36, 66, 73, 75 New Economic Policy 32, 34, 49, 51, 69 News and Letters 75 Oligopoly 84, 92, 93 Oscillation 34–37 between private and state capitalism 33, 34, 35 Russia 37 United States 36, 37 USSR 35 overtime 138, 146 ownership 22, 23, 28, 36, 44, 45, 55, 58, 72, 73, 119, 121, 131, 137, 152, 153, 159, 160, 163, 164, 171, 172, 177

Parsons, Talcott 65 Participatory Democracy 67 pensions 100, 138, 174 People’s Republic of China, see China Planning 3, 4, 6–10, 22, 25, 27–29, 51, 81–91, 95–98, 105–107, 109–112, 114, 125, 153, 155, 156, 164, 179, 184, 191, 192, 195, 205, 213, 222 police 30, 43, 55, 69, 101, 147 Politics 7, 22, 29, 50, 63, 73, 74, 77, 84, 93, 96, 100, 106, 114, 119, 124, 129, 130, 186, 218, 221 Pollard, Sidney 47 pollution 198, 199, 201–204 Popov, Gavril 58 Post-Mao reforms 136, 138 Poulantzas, Nicos 44 Power 1, 3–5, 7- 9, 11, 14, 15, 22, 23, 25–30, 34, 35, 37, 39, 41, 45, 46, 48, 49, 51, 52, 55–60, 62, 68, 70, 72, 75, 86, 87, 91, 93, 94, 96–98, 100, 101, 103–105, 108, 110, 112–114, 119, 120, 123, 125, 127, 129, 131, 135, 136, 138, 139, 142, 148, 153, 155, 156, 158, 161, 162, 163, 165, 170, 172, 173, 175–179, 189, 190, 192, 200, 201, 205, 209, 210, 212, 215–218, 220–225 Prices 3, 22, 32, 53, 122, 126, 131, 153, 158, 160, 170, 177, 179 Administered 153, 158 private sector 9, 35, 82, 89, 90, 95, 104, 132, 137, 145, 159, 170 Processes 14, 26, 27, 28, 31, 34, 55, 60, 81, 84–86, 92–94, 97, 99, 103, 105, 106, 115, 123, 124, 126, 185, 199 Class 26, 28, 34, 123, 126 Cultural 27, 34, 124 Economic 27, 28, 31, 55, 85 Non-Class 28, 34, 123 property rights 137, 172, 175 Property 5, 7, 8, 22, 37, 41–44, 52, 58, 65, 70, 72, 73, 121, 137, 159, 172, 175, 188, 209, 210, 213, 222 Private 7, 8, 44, 52, 58, 72, 172, 209 recession 1, 146 redundancy 143 Reform 2, 11, 12, 33, 49, 58–60, 68, 71, 81, 83, 87, 88, 92, 95, 96, 98–101, 108, 109, 112, 120, 121, 126–128, 130, 136–138, 140–144, 147, 148, 152, 155, 157–162, 168, 171, 173, 175–177, 183–185, 190, 191, 195, 200, 220–224

index rent seeking 137 Revolution 1–3, 5, 8, 9, 11, 12, 15, 21, 25, 26, 28, 30, 32, 34, 35, 39, 42, 47–53, 56, 66, 68–71, 73, 75, 76, 84, 97, 100, 107, 112, 115, 119, 125–127, 136, 151, 152, 154, 155, 157, 160, 163, 176, 179, 180, 190, 193, 209, 210–213, 215, 217, 219–222, 225 1905 Russia 47, 48 February 48, 51 October 2 Rizzi, Bruno 72, 73 Roosevelt, Franklin Delano (FDR) 36, 138, 139 Russia 1, 3, 7, 8, 9, 21, 24, 32, 34, 35, 37, 39–43, 45–49, 51, 53, 55–57, 59–63, 65–69, 71, 73, 75, 77, 78, 90, 156, 187, 189, 191 USSR 5, 7, 8, 10, 21, 22, 24–31, 33, 35, 37, 39, 40, 42, 43, 51–57, 59, 60, 65, 66, 70–72, 74, 75, 120, 121, 129, 153, 154, 206, 213, 214, 219, 222 Tsarist 49, 50 NEP 50, 69, 70, 169, 224 Stalin’s 10, 156 Perestroika 57, 58, 176, 219 Russo-Finnish Wars 71 safety 146, 170, 172, 178, 205 semi-colonial 86, 101 semi-feudal 86, 91, 101, 115 Shachtman, Max 69, 71–76 Shanxi 146, 196 Shapiro, Judith 14, 203, 204 Silk Road 15, 186, 187 Slavery 22, 24, 222 Socialism 2, 3, 5, 6, 8, 11, 14, 21, 25–30, 32, 33, 36, 40, 43, 48, 50, 58, 67, 69, 70, 72–74, 77, 90, 119, 120, 130, 132, 152–154, 185, 211 Socialist Workers Party 69 Solidarity 52, 62, 78, 136, 147 Solidarity (Poland) 136 Soviet Union 2–10, 14, 39, 40, 42, 54, 58, 62, 66–72, 77, 87, 152, 171, 173, 178, 184, 212, 219, 222 Special Economic Zones 103, 108 Stalin, Josef 1, 5, 10, 25, 31, 33, 34, 37–39, 49–52, 66, 68–72, 154, 156, 210 Stalinist 4, 5, 32, 50, 63, 67, 68, 71, 73, 74, 76, 77, 79, 125, 155, 159, 170, 178, 219

233

State 1–15, 19, 21–37, 40–47, 49–62, 65, 66, 68–78, 81–115, 119–124, 126–132, 135–144, 147, 148, 151–154, 156–162, 164, 167–173, 175–180, 183–186, 193–195, 197, 198, 201, 203, 205, 206, 209–213, 215, 217–219, 221–225 Capitalism 1, 2, 4–13, 15, 19, 21–31, 33–35, 37, 40–44, 45, 46, 51, 53, 61, 69, 74–76, 78, 82, 83, 85–88, 90, 93–99, 104–108, 111–114, 119–121, 124, 128–131, 135, 138, 148, 151–154, 159, 162, 172, 175, 176, 179, 183, 184, 219, 222 Controlled 40 Corporatism 11, 12, 135, 136, 144 Council of Ministers in USSR 28, 121 Enterprises 30, 33, 55, 162 Farms 31 Feudalism 11, 22, 119, 121, 124, 128 Socialism 3, 5, 27 statecraft 14, 185, 205 state-owned enterprises 10, 24, 121, 138, 159, 164, 177, 183 Statism 27 steel industry strikes 11, 58, 96, 104, 140, 143, 158, 171 general strike 140 Struve, Peter 46 Student Peace Union 78 students 136, 140, 163, 176, 191, 211, 219 Students for a Democratic Society (SDS) 77 Sun Yat-sen 190, 205 Surplus 8, 10, 11, 22–37, 42, 43, 74, 83, 86, 87, 92–94, 96, 97, 101, 103, 113, 114, 119–131, 136, 137, 142, 143, 157, 160, 165, 184, 188 Appropriation of 35 Distribution of 22 Production of 160 Sweatshops 146, 175, 178, 180 Sweden 26 Terms of trade 32, 33, 36 Third Camp Socialism 77 Tonghua Iron and Steel 147 Trade Union Law 141 Trade Unions Act 99, 102 trade unions 29, 30, 49, 91, 96, 99, 102, 135, 136, 139, 141, 142, 148, 159, 170, 176 Transitions (see China)

234

index

Trotsky, Leon 4–6, 27, 43, 47, 50, 69–77, 98 Trotskyism 17, 69, 71 unemployment 50, 61, 142, 147 United States 7, 8, 15, 120, 203, 219, 224 urban planning 83, 87, 105, 107, 109, 110, 205 USSR (see Russia) 5, 7, 8, 10, 21, 22, 24–31, 33, 35, 37, 39, 40, 42, 43, 51–57, 59, 60, 65, 66, 70–72, 74, 75, 120, 121, 129, 153, 154, 206, 213, 214, 219, 222 Agriculture 24, 30, 32–34, 37, 70 Bureaucracy 27–30, 50, 51, 70, 71 Enterprises in 28–31, 33 Capitalist 24, 32 Military 29, 30, 32, 33, 36, 53, 57 Private 24, 25, 28, 29, 31, 33, 72 Revolution of 1917 Soviet socialism and communism 6, 27, 29 State 22, 24–37, 40–43, 45–63, 68–78 Values 22, 30, 63, 179, 215, 218, 224 Administered 22 Labor theory of 2, 3 Vietnam 3, 67, 77, 174, 210–213 violence 1, 50, 71, 105, 147

Wages 28, 29, 48, 54, 55, 61, 97, 131, 138, 160 Wage Labor 22, 24, 122, 127, 139 Wal-Mart 129, 145 War 1–4, 6, 15, 16, 25, 26, 32, 34, 35, 39–41, 45, 46, 48–53, 61, 66, 70, 71, 73, 74, 76, 77, 88, 99, 130, 154, 165, 187, 190–193, 203, 210, 212, 213, 215, 223 Crimean 46 First World War 48, 51 Second World War 88, 165 Weil, Simone 45 Witte, Sergei von 46, 52 Workers Group 69, 140 Workers Opposition 69 Workers Party 69, 71, 73, 74, 76 workers’ congress 137, 139, 141, 145 World Trade Organization 11, 130, 141, 200 Wynne, Brian 185 Xinjiang 183, 184, 187–189, 196, 197, 199, 202, 205 Yeltsin, Boris 59, 173 Young People’s Socialist League 78 Young Socialist League 78 Zho Enlai 125, 155, 156