'Socialist' China questioned

The Questions of the Day pamphlet got a rather ire response from some maoists. The following article was the response. - Gray

OUR NEW PAMPHLET Questions of the Day is, we think, a good 50p worth.

But it does contain an error. On page 86 in the chapter on the Chinese Revolution, we quote from Mao's July 1949 statement On People's Democratic Dictatorship.

"...and we must unite with the national bourgeoisie in common struggle. Our present policy is to regulate capitalism not to destroy it."

Unfortunately, we omitted the word "present." You may be excused for asking 'So what?' However a blunder is a blunder. Besides, some members of a maoist sect were particularly annoyed and accused us of being liars and distorters.

The omission of the word "present" is important to the maoists. They believe that the policy of regulating capitalism no longer applies because China is now Socialist.

Let's examine that claim. The People's Republic inherited from the Nationalists a sizeable state-owned sector in industry, banking and transport. About one third of industrial output was produced by enterprises confiscated by the Nationalists as Japanese assets at the end of World War II. It gave Mao and the Chinese Communist Party a base for increasing state ownership.

At first, private enterprise was allowed to continue. After all hadn't Mao urged the workers to "unite with the national bourgeoisie in common struggle"? (Whatever happened to the class struggle? You may well ask) This meant that those hundreds of thousands of capitalists got their reward for backing the winning side in the civil war.

Between 1952 and 1955, economic and ideological pressures coupled with financial inducements helped enlarge the state control at the expense of private ownership. Government policy was still to regulate capitalism, and the system was officially referred to as "state capitalism".

Then in 1955 a large scale nationalisation drive was launched to convert the rest of the private enterprises in modern industry to joint public and private ownership.
By the following year 67.5 per cent of industrial enterprises excluding handicrafts was government owned. The remainder were joint public and private enterprises. (State Statistical Bureau, Ten Great Years, Peking 1960.) The Goverment apparatus was still busy regulating capitalism.

But wait! Here's Mao claiming to have established socialism. In his speech 'On the Correct Handling of Contradictions Among the People.' Feb. 1957, (Selected Works Peking 1977 vol. 5, p. 394) he says:

"But our socialist system has only just been set up; it is not yet fully established or fully consolidated. In joint state-private industrial and commercial enterprises, captalists still get a fixed rate of interest on their capital, that is to say exploitation still exists."

And How. In these public-private enterprises, the capitalists, in return for relinquishing full ownership received 5 per cent annual interest on the value of their investment regardless of profit or loss. This remuneration was promised to private stockholders for a period of six years. It should therefore have come to a halt in 1962.

However in 1966, Dr. Barry Richman, a Canadian consultant in management and economic development, went to China on a two month tour. He visited eleven cities and in the course of his research project conducted interviews in some 38 industries with over 200 Chinese people including managers, Communist Party and Trade Union Officials, specialists, engineers and other workers.

The results are in a bulky 968 page tome entitled Industrial Society in Communist China (1969). The chapter entitled Communist China's Red Capitalists is most illuminating. It opens as follows:

"On my visit to Shanghai in May 1866 it was indeed disconcerting for me to be picked up by a native Chinese capitalist in a new Jaguar, taken to his large factory for a day of discussions, and later to his sumptious home where he still lives as a wealthy industrialist does in a capitalist nation. Mr. Wu Tsung-i, my Chinese Communist capitalist acquaintance, not only lives like a captalist but also looks like a capitalist and at times, still thinks and acts like a capitalist . . ."

No wonder. His investment was assessed at $640,000 from which he was paid the equivalent in yuan of $32,000 per year. He also picked up a salary of 380 yuan per month. But Mr. Wu was small time.

Comrade Liu Tsing Kee was a real Chinese fat cat. A member of both the Shanghai Congress, and the National People Congress, he received a whackmg $400,000 annually from his five major cotton mills. His family assets were estimated at $16m and according to Richman he employed four servants in a palatial home which was stuffed with antiques.

Richman reckoned that there were about 300,000 capitalists in the People's Republic. Ninety thousand of them, he said, were in Shanghai alone. And this was supposed to be Socialism.

As recently as 1972 Professor Ishwa C. Ojha of Boston University attended the funeral of the late minister of Foreign Affairs, Chen Yi. The professor told our companion journal The Western Socialist (No. 3 1972) that the national capitalists were represented by one of their number. In his opinion however, they were at that time somewhat subdued and not advertised as extensively as they had been in the past.
At the present time the Chinese 'socialists' are not very forthcoming about the status of the national capitalists. Perhaps they're just too much of an embarrassment.

But regardless of their current standing one thing is obvious. The Chinese Communist Party equates socialism with nationalization. Mao himself said so in 1949.

"When the time comes to realize socialism, that is to nationalize private enterprise, we shall carry the work of educating and remoulding them (the national capitalists) a step further."
(On the People's Democratic Dictatorship)

In the opinion of Professor Alexander Eckstein (China's Economic Revolution, Cambridge Press 1977)

"... a country embarking on the process of deliberate industrialization in the mid-twentieth century will necessarily develop a different industrial structure than a country that may have experienced its industrial revolution amidst laissez-faire conditions in the nineteenth century."

State ownership in China is nothing more than a move towards modernisation in an attempt to enable China to compete effectively with other nations in 20th century capitalism.

Apologists for the Chinese regime sometimes maintain that criticism is irrelevant because they are building an egalitarian society.

Professor Eckstein found little evidence of this when he visited China in 1972.

"On the contrary, he writes on p. 281, "as one travels around China and meets peasants, workers, cadres, and high ranking government officials, status differences are clearly apparent in many subtle ways such as dress, bearing, deference by others, and many other privileges that surround power positions in all societies."

He also points out that wages of top people can be as much as twenty times that of the lowest paid.

The Chinese Communist Party, being supposedly Marxist, would presumably be aware of Marx's pronouncement on the possibility of egalitarianism within the wages system.

"Upon the basis of the wages system the value of labouring power is settled like that of every other commodity: and as different kinds of labouring power have different values, or require a different quantity of labour for their production, they must fetch different prices in the labour market. To clamour for equal or even equitable retribution on the basis of the wages system is the same as to clamour for freedom on the basis of the slavery system." (Wages Price and Profit)

Modern China has commodity production, buying and selling, wages and prices, money and markets — all the paraphernalia of capitalism.

Speaking about the modern state Engels pointed out:

"The more it proceeds to the taking over of the productive forces the more does it actually become the national capitalist, the more citizens does it exploit. The wages workers remain wages workers—proletarians." (Anti-Duhring)

Anyone who still doubts that China is capitalist has only to consider Chairman Hua's newest master plan — the introduction of bonuses, work quotas and piece work (Guardian 28th April 1978)

As any British factory worker knows, piece work is an attempt to increase productivity and therefore profits. It causes a speed-up in work rate which can lead to tiredness and a relaxation in safety standards.

Marx's view of piecework was straightforward. It was, he said "the form of wages most in harmony with the capitalist mode of production." (Capital Vol. 1)

After the great leaps and the five year plans the Chinese Communist Party's policy is still to regulate capitalism — only conscious political action by a majority of the world's working class can destroy it.

Eddie Toal. Socialist Standard, August 1978

Questions of the Day (part 7)

Nationalisation

THE TASK of socialists has also been made more difficult by the association in many people's minds of nationalisation with Socialism. Nationalised or State capitalist industry is, in fact, just another way of operating capitalism which leaves unchanged the exploited and subject position of the workers
In Britain the Labour, Tory and Liberal parties (and the 'Left-wing' organisations) have all spread confusion by the pretence that nationalisation is Socialism. Among businessmen there has been a growing recognition of the realities of the situation as, for example, an article, 'The Rise of State Capitalism', published by Management Today (December 1976):

"Capitalism is mostly thought of as the private owner¬ship of the means of production. The emphasis is on 'private'. In practice, however, the developed countries of the world have seen an increasing move towards State ownership of the means of production, or State capitalism".

For well over a century, governments in Britain have from tune to time considered the desirability of nationalising certain industries, but it was not until the Labour Party was formed that nationalisation became a continuing issue in party politics and elections. At first the Labour Party stood for a comprehensive programme of nationalisation in the belief that it would solve many of the problems of the workers and would earn votes for Labour Party candidates. In 1945 when, for the first time, the Labour Party held office with a parliamentary majority, the election pledge to nationalise basic industries was at once put into effect and a number of industries were nationalised, includ¬ing coal, transport, electricity, gas and the Bank of England. Later on there was talk of nationalising additional industries such as insurance, chemicals and the joint-stock banks, but by this time experience of nationalisation had brought about some change in the attitude of electors and the leaders of the Labour Party had clearly come to the conclusion that a pledge to extend nationalisation would no longer be the vote-catcher that it had been in earlier years.

Among the factors that had made nationalisation less attractive with electors may be mentioned successive increases of charges by the nationalised industries (coal, railways, gas and electricity) and the fact that some nationalisation schemes, notably the proposal to nationalise insurance and distribution, caused difficulties between the Labour Party and the co-operatives because the latter felt their financial interests might be adversely affected. In addition the workers soon found — as the Socialist Party of Great Britain had foretold — that nationalisation or State capitalism does not differ from private capitalism as far as the exploitation of the workers is concerned. They still needed their trade unions, and the strike weapon, to protect themselves against their employers.

The outcome of nationalised industries under Labour government was such that many leaders of the Labour Party began to express doubts about the political wisdom of introducing further nationalisation measures. This led to a controversy within the Labour Party between those in favour of more nationalisation and those against it. In the end a typical compromise was reached. Gaitskell. the leader at that time, was foiled in his bid to revise clause four of the party's constitution which committed it to wholesale nationalisation, but as an immediate demand nationalisation was tacitly dropped with the vague statement that the Labour Party would consider taking over any industry that in their view 'failed the nation'. By this they meant what harmed the general interests of British capitalism either by inefficiency or monopoly.

In reaching this conclusion the Labour Party adopted an attitude much like that of the Liberal and Tory cartes in the past. It was they who nationalised the postal, telegraph and telephone services, and set up a number of public corporations such as the Port of London Authority, in each instance in order to deal with some particular problem as it arose. In general they resorted to nationalisation when other methods of curbing a monopoly and of securing an efficient and cheap privately-run service had failed. Although the railways were not nationalised until 1946 the first Act of Parliament authorising nationalisation was passed in 1844 under Peel's Tory government. It was introduced by Gladstone, President of the Board of Trade, who was at that time a Tory Free Trader, and was intended as a threat to hold over the heads of the railway companies to force them to reduce charges. It served that purpose and was not used to secure nationalisation though it remained on the statute book.

A new wave of nationalisation and government intervention began with the trade depression that coincided with the return to power of Labour Government in 1974. Unable to stand up to foreign competition, a number of big companies and industries got into financial difficulties and the issue presented itself in the form of government action to save 'lame ducks'. The deciding factor was whether the government dared incur unpopularity with the trade unions and the investors by allowing them to go bankrupt. The issue had actually arisen when the Tory Government came to power in 1970. At first the Tory Prime Minister, Mr. Heath, had declared his intention to let 'lame ducks' sink; but under pressure inside and outside his own Party he modified his attitude and, when Rolls-Royce failed, he had to intervene to save part of it.

The Labour Government went further and introduced new nationalisation measures, for example, shipbuilding, and embarked on new forms of intervention, including the British National Oil Corporation controlling North Sea oil in collaboration with the Oil Companies. Also the National Enterprise Board which holds shares on behalf of the government in a number of companies including British Leyland, Rolls-Royce, Alfred Herbert, Ferranti and Inter¬national Computers. The Government also provided millions of pounds to keep alive the American-owned Chrysler motor concern in Britain. By 1975, 30 per cent of all workers were employed in State concerns.

Nationalisation has nothing to do with Socialism and involves no infringement of Ihe fundamental features of capitalism. Apart from nationalisation carried out for military purposes, it is usually concerned with the problem of controlling powerful private monopolies or subsidising unprofitable but vital branches of industry in the interests of the capitalist class as a whole, and to prevent an increase of unemployment All private capitalist enterprises are. and have long been, subject to some controls, for instance their obligations under the Companies Acts, Factory Acts, Minimum Wage Acts and Equal Pay Act. Some of them, as for example, the railways, gas and water companies, were subject to additional controls in respect of charges. The problem facing governments in their administration of capitalism has therefore been that of deciding which of the various forms of control best serve the interests of capitalist industry and trade as a whole. In the early days if a monopoly had to be brought under close control the model was the Post Office in which the industry or service is run as a government department, staffed by civil servants and with its finances, its policy and day-to-day administra¬tion under control of a Minister. Later on both the Tories and the Labour Party tried out the form of organisation in which administration and finance are controlled by a Board which the Government appoints but with whose day-to-day activities the Government does not normally interfere though having the ultimate power to do so. Under these Boards, like the National Coal Board and British Rail, the workers are not civil servants. By an ironic twist of history the Post Office itself has now been re-organised as a Public Board.

From the investors' point of view nationalisation usually means giving up an investment which may pay high dividends (or none at all if the concern fails to make a profit), and receiving in return a government-backed security which pays a fixed rate of interest no matter what happens to tbs nationalised industry; securities which they can always sefi if they wish to invest again in private industry. From ths point of view of capitalism the problem is to decide wioct is the best way to run it.

In the United States, often held up as the model of a country of private enterprise free from nationalisation, capitalist policy has taken a somewhat different course from that favoured in Europe. Instead of nationalising monopolies, American governments have claimed that they effectively control them. The Sherman Anti-Trust Law of 1890 prohibited, under severe penalties, 'every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations'. Under the 1890 Act and subsequent amending Acts, proceedings were taken in a large number of cases, resulting periodically in spectacular court decisions ordering the break-up of trusts such as Standard Oil and the Tobacco trust or gaoling execu¬tives; but new violations of the law are constantly being alleged. Also legislation has in certain industries specifically allowed combinations to be formed, including shipping, marine insurance and railways. Although the predominant interests in American capitalism may hold, as they do, that anti-trust laws are a better solution of this capitalist problem than nationalisation would be, the groups whose interests are damaged by the big combinations continue to demand more effective action to restore competition.

Anti-monopoly laws have also been passed in Britain but, despite the fuss surrounding the abolition of resale price maintenance by the Tories, these have been laxly enforced and have had little impact. Indeed, the policy of the 1964-70 Labour government was to encourage monopoly, through the Industrial Reorganisation Corporation they set up, especially in the export and war-preparation industries. The Tories scrapped the I.R.C.

Neither trust-busting in America nor partial or wholesale nationalisation in Britain and Russia (whatever they may have achieved for the privileged minority in each country) has solved the poverty problem of the working class. Time alone will show, in the competitive struggle in world markets, whether Russian wholesale nationalisation or American stress on 'efficiency through internal competition', or British capitalism's compromise between the two, will prove the most effective method of organising capitalist production. There are in Russia influential advocates of greater reliance on competition and the profit motive; but no matter how the issue is decided it will leave the workers of all three countries living restricted lives as wage-earners exploited for the benefit of the privileged minority of the population. Whatever happens it seems quite clear that some amount of nationalisation is here to stay in all countries as long as capitalism lasts.

But even without nationalisation the capitalists in all countries have moved away from their nineteenth-century belief in the virtues of unrestricted competition and hi the carrying on of production under their own control without government interference. Now the capitalists, in America as well as in Britain, accept the position that their individual freedom of action will be limited through legal obligations and governmental controls which they would have denounced half a century ago.

But whether capitalism's policy is competition, trust-busting, nationalisation or modified government controls, it is still capitalism. And capitalism, whatever its form, offers no hope to the working class.

further reading
Nationalisation or Socialism 1946 (.pdf)