China's Market Communism

Challenges, Dilemmas, Solutions

Steven Rosefielde,Jonathan Leightner

• Editore: Routledge
• Anno: 2017
• ISBN:
  9781351402316
• Edizione: 1
• Argomento: Economics
• Categoria: Development Economics

China's Market Communism guides readers step by step up the ladder of China's reforms and transformational possibilities to a full understanding of Beijing's communist and post-communist options by investigating the lessons that Xi can learn from Mao, Adam Smith and inclusive economic theory. The book sharply distinguishes what can be immediately accomplished from the road that must be traversed to better futures.

PART I

Red Communism

1

POLITICS IN COMMAND

The Communist Party of China (CPC), founded July 1, 1921 by Chen Duxiu and Li Dazhao, seized control over the Middle Kingdom under the leadership of Chairman Mao Zedong on October 1, 1949.⁹ Chen, Li and Mao were Marxists of diverse persuasions. Their notions of communist utopia and tactics differed, but all agreed on fundamentals. The task of the Chinese Communist Party was to eradicate capitalist political and economic rule, install a worker-peasant state, criminalize private property, the market and entrepreneurship, and establish an exploitation-free, harmonious, egalitarian order. The dictatorship of the proletariat (and peasants) was seen as a sine qua non to thwart counter-revolution and foster rapid industrialization during a “socialist” transition period, but all agreed that in the fullness of time the Communist Party would turn over the reins of government to self-regulating co-operators.

Chen’s, Li’s and Mao’s notions of communism’s future were visionary. They neither understood nor concerned themselves about technical economic feasibility. However, this was of little moment. All believed that communist rule meant revolutionary “politics in command” during the transition period.¹⁰ The CPC’s task was and is to fortify communist power and advance the communist cause as its leaders perceive it and necessity dictates without fretting about economic efficiency.¹¹

Chinese leaders have interpreted this mandate in two broad ways. They embraced the Stalinist notion of command economy under Mao Zedong from 1950–1976 (with an anarcho-communist interlude during the Cultural Revolution),¹² and managed markets thereafter. Today both schools assume that the Communist Party will someday fully realize Karl Marx’s communist vision elaborated in his Economic and Philosophical manuscripts of 1844 and The Communist Manifesto,¹³ and should this prove impossible, they intend to satisfice by striking the right balance.

The difference between the Maoist “red” and Xi Jinping’s authoritarian “expert” model is simple. Mao’s Red Communism proscribes private property, business and entrepreneurship, supplying society instead through requisitioning and rationing (under the Party’s guidance or direct worker/peasant action), and enlists revolutionary spirit to combat bureaucratic abuses and promote communist egalitarianism.

Xi Jinping’s technocratic regulated White Communist market system retains aspects of the command principle including state freehold ownership and planning, but supplements it with leasehold property and regulated private enterprise. Xi’s market communism puts “experts” in charge and rejects “red” anarcho-communist zealotry. The dichotomy, in a nutshell, is “revolutionary” planning versus regulated market communism.

In Mao’s world managers, workers and peasants are assigned tasks by the Communist Party or by the communist invisible hand in anarcho-communist moments. Comrades work for state fixed wages, or spontaneously cooperate. The Party commandeers, rations, distributes and sells goods to the people at state set prices. Anyone who does not work is a parasite, an offense punishable by forced labor in laogai (concentration camp).¹⁴ Profits and rents belong to the state (people) and together with taxes fund public programs. The people are supplied with basic housing, transportation, energy, medical and educational services. The distribution of income is egalitarian because there are no private asset holders and managers receive neither profits nor rents. Mutual support further enhances social justice. Money and credit are not available for speculative purposes, eliminating financial crises. Resources are mobilized to spur technological progress and rapid economic development. Mao’s command economy operated at full throttle, oscillating only with the winds of enthusiasm and labor effort. State wage and price-fixing kept inflation in check.¹⁵

Mao’s command model was a macroeconomic dream come true. It provided overfull employment, price stability, business cycle-free production and rapid economic growth. Its primary drawbacks were labor coercion, consumer goods shortages (rationing) and shoddy merchandise. Workers and peasants were compelled to obey the Party and accept their lot. They could not acquire the goods they desired because it was illegal for consumers to negotiate with state suppliers. The system was a Spartan economy of shortage where everyone only received the basics because the lion’s share of public expenditures was devoted to investment, defense and public goods. The supply of consumer goods gradually increased over time, but this meant little to people compelled to make do with things they did not want.

Citizens had limited opportunity to save and accumulate. They did not have to insure their property because they had none. They did not have to fret about foreign travel, transferring assets abroad, democratic action, civil rights or religion because everything not explicitly authorized by the Communist Party was forbidden.

This was a devil’s bargain. Mao’s communism provided macroeconomic robustness in exchange for compulsory labor, forced substitution and civil disempowerment. It gratified those who preferred a bare-boned egalitarian existence (pauper communism), and was an anathema to hedonists. The system was predicable because it could not be reformed from below. The Party repressed private initiative and civic action. If the Communist Party leaders were content with their devil’s bargain, the people had to grin and bear it, barring a counter-revolution.

The counter-revolution happened. It came from within the Communist Party, gathering momentum after Mao Zedong died September 9, 1976. It was organized to overthrow aspects of the command paradigm and anarcho-communist zealotry in favor of economic power sharing between the Party and a new breed of leasehold entrepreneurs. Deng Xiaoping led the charge. He permitted Party and non-Party members to lease state assets and produce for domestic and foreign markets on a for-profit basis. International investors were encouraged to establish production facilities in special economic zones on the mainland. Deng allowed private, jointly owned and state companies to issue bonds and equity shares (for leasehold businesses) on domestic and foreign stock exchanges. The Renminbi (RMB) gradually became convertible. The Party provided financial support for speculative activities, and allowed prices and wages to be competitively negotiated.

This devolution of economic authority from the Communist Party to for-profit producers eliminated Mao’s economy of shortage. Deng’s new deal sacrificed macroeconomic robustness to preserve the Party’s political monopoly, and achieve higher consumer satisfaction, substantial economic freedom, some civic liberalization and inequality. Xi Jinping’s market communism today no longer sneers at economic efficiency and has zero tolerance for Red Guard militancy. It permits economic rewards to reflect marginal value added and has curbed forced substitution. The cost of this liberalization has been involuntary unemployment, inegalitarianism, social injustice, inflation, financial speculation, excessive debt and the increasing danger of financial crises.¹⁶

The leadership seems broadly satisfied with the new arrangements. This has led many to infer that China has abandoned communism for capitalism, but the judgment is superficial. The Communist Party remains at the helm. It directly controls the economy’s commanding heights (the largest companies, including the military–industrial complex) and the supply of public goods. It is the freehold owner of the nation’s land and entire productive capital stock, including property nominally classified as private. It has immense powers of taxation. It issues executive orders, mandates, rules and regulations at will, and rejects laissez-faire. The Communist Party acts as the economy’s master puppeteer using all the instruments at its disposal including internal Party command to compel the economy to do its bidding, and can legally rescind leases and re-appropriate the nation’s assets at its discretion. Consumers are only partially sovereign at the Party’s sufferance, and the leadership appears to have no intention of sharing political power with rivals or building a democratic regime with full civil liberties under the rule of law.

Market communism despite these reservations is better for citizens who abhorred the excesses of the Cultural Revolution, but is a dubious bargain for egalitarians, Red Guardians and those who prize social solidarity. Xi Jinping and the Communist Party majority are under pressure to strike a better balance. GDP growth has been decelerating and the threat of a major financial crisis is mounting. Mao’s supporters are calling for accommodation, while others are pressing the case for democracy.¹⁷

What should be done? Should the Chinese Communist Party change course by paring or further empowering the market? Should it enhance anarcho-communism? Should it abandon or strengthen its dictatorship of the worke...

Indice dei contenuti

• Cover
• Half Title Page
• Title Page
• Copyright Page
• Dedication
• Contents
• List of figures
• List of tables
• Preface
• Acknowledgements
• Introduction
• Part I Red Communism
• Part II White Communism
• Part IV Beyond Communism
• Prospects
• Notes
• Bibliography
• Index