INTRODUCTION

THE MAOIST METHOD AND THEORY

Historians are taught that they should go right to first- hand accounts to write history. In the case of China, only cultural arrogance could prevent a Western historian from taking Chinese views of their own history seriously. Massive quantities of documents are available in translated form. The Chinese translate their own important works and the U.S. Government translates what the Chinese government and media says within earshot. Yet, in the West, there are few academics who claim to be approaching history or anything else with the framework embodied in Marxism-Leninism Mao Zedong Thought. From here in the word “Maoist” will refer to adherents of Marxism-Leninism Mao Zedong Thought. As the liberator of China from semi- feudalism and Japanese imperialism, Mao led China from its formation in 1949 to his death in 1976. Mao’s philosophy guided the building of socialism in China. As such, Mao ranks in importance with Lenin in the world’s experience with communism.

This book is derived from the Marxist political economy approach to China’s recent history. None of the propositions here are original. Marx, Lenin and Mao provided theories, practices and historical summations that deserve to be taken seriously before original ideas are applied to China’s history since Mao. Unfortunately, except for a little work done by people in the international communist movement, this thesis is original in that it seeks to understand the post- Mao period by using the theory of Mao, and Zhang Chunqiao, Wang Hongwen, Jiang Qing (Mao’s wife) and Yao Wenyuan—the so-called Gang of Four—who were Mao’s main supporters and followers in the party and government during the Cultural Revolution from 1966 to 1976. This critique of China is diametrically opposed to the mainstream Western critique of China as undemocratic and non-market determined.

Yet, the Maoist critique would be a fascinating dream if it were not for the fact that the Cultural Revolution was such a thorough preparation against today’s switch to capitalism in China. Mao instructed that

the present great cultural revolution is only

the first; there will inevitably be many more

in the future. In the last few years Comrade

Mao Tse-tung has said repeatedly that the

issue of who will win in the revolution can

only be settled over a long historical period.

If things are not properly handled, it is

possible for a capitalist restoration to take

place at any time. It should not be thought

by any party member or any one of the

people in our country that everything will be

all right after one or two great cultural

revolutions, or even three or four. We must

be very much on the alert and never lose

vigilance.

Rarely did an important speech during the Cultural Revolution start without reminding the audience of the recent history of the struggle against the capitalist-roaders — people who prefer capitalist means of organizing the economy over socialist ones. Well into the 1980s the Chinese leaders who installed capitalism in China after Mao’s death have felt obliged to attack the socialists in their speeches by stating that the so- called capitalist-roaders “Lin Biao and the Gang of Four” have been smashed.

The current government worries about the revolutionaries Mao trained in the Cultural Revolution. They were prepared for a fight against exactly the kind of capitalism-in-the-name-of-socialism seen in China today. Most Western academics and politicians wish the Chinese could just forget about the Cultural Revolution and build a free market economy. However, the post-Mao leadership knows that the question of socialism versus capitalism is still on the minds of the Chinese people. Even as of 1984, the official magazine China Reconstructs starts its feature on agriculture by asking the classic Cultural Revolution question about class struggle. “It is true that the new policies have enabled the peasants to prosper, but many in China and abroad have asked the question: Where are they leading—in the direction of socialism or capitalism?”

Some books have been written by the Chinese in defense of the so-called reforms since Mao’s death— reforms that are really just part of a capitalist social revolution. China’s Economic Reforms (1982) and Economic Reform in the PRC (1982) defend the government’s actions as reforms within a Maoist and socialist legacy. Quite naturally these books involve a Chinese assessment of Chinese history, especially the Cultural Revolution. As will be seen, the Chinese rulers have difficulty in adopting the language and ideas of their bourgeois counterparts in the West, no matter how much sympathy exists between them. When there seems to be irrationality in the economy, the Chinese call it “the anarchy of production”—a distinctly Marxist-Leninist phrase. Major policy debates are almost always preceded by references to relevant Marxist-Leninist doctrine and experience.

An important feature of the capitalist counterrevolution in China is exactly this kind of retention of Maoist terminology. The counterrevolution attacks Mao in the name of Mao and socialism. This has resulted in international confusion about China’s true nature. Unfortunately, the world still thinks of China as “socialist.” The wrath expressed towards post-Mao China in this book would not be half as great if the current leadership just admitted its abandonment of Mao and socialism. Instead of calling the new economic organization a new capitalist experiment, China’s leaders since Mao have chosen to deceive the people of the world. Even within academic circles that study China there is considerable confusion. In 1979, Neville Maxwell was still able to say that there were two major interpretations of the post-Mao era. One sees China as shaking off “‘ideological rigidity’” in favor of “‘a vigorous growth-oriented pragmatism.’” The other sees the “Thermidore: or as some Marxists put it, the capture of power through coup d’etat by ‘revisionists.’”

“COUNTERREVOLUTION” AS SOCIAL REVOLUTION

Social revolution may be defined as the seizure of state power from one class by another. The revolutionary class proceeds to change institutions to its conscious and unconscious likings. In this sense, Hua’s seizure of power from the Gang of Four is a social revolution led by the state capitalist class. Reasons of teleology aside, China is being labelled counterrevolutionary in this thesis because it is undoing the economic organization of the Cultural Revolution, which Mao and the Gang of Four led. However, there is no reason one could not drop the term “counterrevolution” and simply speak of a capitalist social revolution as having occurred since 1976.

Social revolutions are as permanent as the dominance of the ruling class in charge. Social revolutions are qualitative changes that may be overturned by other social revolutions. Reform on the other hand is a change of degree, something that the dominant class can enact in its own interests.

A list of the important actions that the post-Mao leaders Hua and Deng took against the Cultural Revolution is in the conclusion. The list is also the evidence for the existence of state capitalism in China since the Cultural Revolution’s theory of “continuous revolution” has been adopted here.

The reforms of “responsibility,” “total responsibility,” one-man management, two-track education, experts in command, expansion of private plots and profit as the “nose of the ox” are not new ideas. Today’s leaders are as historically-minded as their predecessors. They point out when they are adopting and implementing an old idea of Deng Xiaoping, Hua Guofeng, Zhou Enlai, Liu Shaoqi or Chen Yun. Sometimes they even mention American or Soviet experience. Most of what is new is the implementation of old ideas. Despite the Cultural Revolution, the conditions for implementing state capitalist “reforms” are better than ever before.

Ultimately, counterrevolution in China is the victory of old ideas, represented by old leaders like Deng, over new socialist ideas embodied in the Cultural Revolution. The implementation of the old ideas is made possible by the state capitalist victory in the entire superstructure— the arts, culture, media, bureaucracy, military and the so-called Communist Party that leads China. When Zhang Chunqiao talks about the “state” or the “dictatorship of the proletariat,” he means the entire superstructure. Now that the Gang of Four has lost its last footholds in the media, arts and culture, it is possible to speak of the “dictatorship of the bourgeoisie.” One of the arguments to be pursued in the thesis is that the Maoists had already lost in the bureaucracy and army by the time of the 1976 coup. Had Mao lived a little longer, the Four would have needed to keep up their campaigns in the media and arts to win over public opinion and put the military and bureaucracy in Maoist hands. Seizure of political power means more than holding the positions of head of the government and chairperson of the party.

It is beyond the capability of the author to offer a theory of counterrevolution at this time except to the extent that it already exists in writings of the Cultural Revolution. Still, classes, class alliances, opportunity and ideology must be central in the case of China. Discussion in this paper will demonstrate the class interests behind various struggles in China, the importance of a material basis for counterrevolutionary ideas, the opportunities given by that material base and the decisiveness of ideology and politics as rallying points during the struggle between socialism and state capitalism.

STATE CAPITALISM

In this essay, capitalism will be said to exist where surplus labor of wage laborers is disposed of by people who are not wage laborers. Surplus labor is that labor which is performed in addition to that needed by the wage laborers for their own subsistence as defined by the prevailing norms and historical circumstances. The group of people who dispose of or appropriate the surplus generated by wage laborers—the group alien to the working class—has its own interests apart from and against that of the wage laborers and is called the capitalist class.

The capitalist class has taken different forms in history. Competitive capitalism is characterized by individual entrepreneurs. When the Vanderbilts and Rockefellers destroy their competitors and rise above the pack, competitive capitalism is replaced.

Monopoly capitalism features a locus of competition shifted to the inter- industrial and international arenas. Monopoly capitalism exists where one company dominates an entire industry. For example, although IBM still faces some domestic competition in computers, its more serious competition comes from foreign computer giants and monopolies with products that substitute or mesh with computers. ATT was an important competitor of IBM even though it was a monopoly of the telecommunications industry.

Generally, corporate capitalism in the West has a monopolistic or oligopolistic nature. In short, history has seen competitive capitalists, corporate capitalists and state capitalists, not necessarily in that order or as an inevitable progression.

Many people will accept that China has had some kind of counterrevolution without agreeing that China is state capitalist. They will ask why lump China together with the capitalist countries? Is not China quite distinct?

It is only an empiricist truism that every country is distinct. There is a use in classing like with like to whatever extent possible, especially in order to understand aspects of international political economy.

Presumably it is useful to class Western capitalist countries together despite their own distinctive historical characteristics. The United States started out as a country of landowners and had a very important slave era. England had its eras of competitive capitalism and corporate capitalism before weakening in the face of declining empire and a powerful labor movement with its own party. Germany never really had competitive capitalism until recently arguably thanks to the alliance of iron and rye. Also, Germany handled its decline from empire after World War I in a different way than England did. Furthermore, in Japan there is a strong state role in the economy and workers tend to remain with one firm more than they do in the West. All these economies have many particular characteristics and defy teleological categories, so why not throw in China if it shares certain minimal commonalties? By defining the class structure as a variable and categorizing China, Japan and the United States as capitalist countries, we expect a certain payoff in explanatory power.

Thirdly, to call China state capitalist is to challenge conventional dichotomies of planning/market and command/market. William Lazonick has pointed to Alfred Chandler’s work describing the visible hand of corporate planners in so-called market economies. In South Africa, the state runs more than half of the economy and the Pentagon is larger than any Soviet ministry. England’s government nearly matches the level of investment of the English private sector. Planning also characterized Nasser’s Egypt, Nazi Germany and Mussolini’s Italy. In the early nineteenth century planning would have stood out, but today it means next to nothing as far as classing societies goes. Thus, lumping societies together on the basis of whether they have planning or not is fraught with difficulties. Still, the point is well taken that lumping China into the capitalist category only reveals more than it conceals when recourse is made to historical explanations of institutions.

Surplus appropriation from wage labor entails unemployment, firing, labor regulations and sexism—institutions that keep workers in their place. This is not necessary in the dictatorship of the proletariat where workers are mobilized in political campaigns concerning their interests in the state and economy.

In China today, as in the other capitalist countries, participation of the workers is minimized. Politics is reserved for the party, state and factory directors.

One might argue that the Chinese workers want to be coerced because the benefits of the new so-called reforms are greater than their evils. This is not to say that because a majority of people in the United States supports the U.S. system, the United States is not capitalist. Likewise, the “reforms” in China are probably supported by a majority of the population in some way for now. That does not mean that developments in China won’t eventually pierce the rhetoric of today’s crop of reformers, modernizers and intellectuals.

As will be clear in this book, the degree of coercion of certain groups in China makes it unlikely, especially for women, poorer peasants and would-be trade union members, that all groups are equally enthusiastic for the “reforms.” These groups are fairly well excluded from the counterrevolutionary coalition of top party and military officials and factory directors, and their allies amongst the Western-style intellectuals (as opposed to Mao’s revolutionary intellectual or Gramsci’s organic intellectual), individual entrepreneurs and pedlars, and peasants who for various reasons can “make it” in decollectivized agriculture.

Repression always makes resistance difficult. In China, there is an underground communist party, but undoubtedly sustained and explosive resistance only occurs when there is an opportunity for such. For example, in South Africa, less than two percent of Blacks defended apartheid as of 1972 and 75% described themselves as “angry” or “embittered.” Yet, a majority of Blacks in South Africa felt powerless and 42% thought that Blacks as a group are completely helpless. Coercive economic and political institutions, especially those that keep wage laborers in their place, are to be expected under capitalism, but the absence of widespread visible opposition to capitalism does not mean that China’s course is not capitalist or uniformly popular.

Edwin Winckler has suggested the phrase “bureaucratic marketization” to characterize the recent Dengist reforms. This phrase is suggestive because implicit is the understanding that institutions—namely a bureaucracy—matter.

Other academics seem to assume that markets will smash institutional barriers with the force of consumers’ preferences behind them. Most believe that if the Cultural Revolution bureaucrats were overcome, there could be a freer market and a large portion of China’s economic problems would be subsequently resolved by the market. However, “bureaucratic marketization” is a contradictory phrase which implies conscious marketization and a “second-best” world for neoclassical economists who are relatively uncomfortable when the real world only offers them so- called imperfect competition. In other words, as much as a bourgeois economist would like to deny it, politics, institutions and class struggle cannot be assumed out of the picture.

A large portion of this paper is devoted to the anarchy of production in China. However, prices are not thoroughly examined. While it is true that incorrect prices can result in dislocations of all kinds, this does not really shed much light. What are the causes of “incorrect” prices is the real question.

What must be examined is production, where individuals of the state capitalist class exert power and destroy the market (as ideally conceived by economists) as part of the competition among state capitalists. This competition causes over-investment and other kinds of blindness. It is true that China had economic dislocations before the recent capitalist revolution, but for the first time since 1949, there is no control over investment. When in the past investment became out of hand because of some campaign, the Chen Yuns could be called in and investment could be changed. This is no longer true, so only an institutional explanation accounts for the problems in investment.

On the consumption side, Sweezy and others have shown how the capitalist class as a whole brings on economic depression and waste by taking too great a share of income which subsequently can not be spent. The Underconsumption School including the likes of Sismondi, Rosa Luxemburg, Keynes and Sweezy calls for a redistribution of income. The only problem with this underconsumptionist theory is that it tends to make people forget that competition amongst capitalists brought about the overproduction (and the coercion of laborers necessary to bring about that production). Redistribution of income can only occur if either some domestic capitalists go under from the added tax thus increasing the profits and well-being of other capitalists willing to pay the tax and survive or if exploitation abroad is increased. Such a redistribution means even harder competitive conditions for the capitalists.

The position here is that institutions are not and cannot be the mere tools of the Rational Free Market and because of the tendency towards concentration of capital, whatever corrective merit there is in a competitive market is destroyed by the market’s tendency to leave fewer and fewer survivors in price competition. This is especially true in China where a capitalist runs both his enterprise and the local government. In the real world, capitalists are not restricted to economic competition. They throw everything into the fray— bribery, women, drink, intelligence information, threats to relocate and the kitchen sink. The tendency to find ever cheaper methods of production merely to survive drives production and accumulation beyond that rationally dictated by the intersection of supply and demand curves where a firm supposedly faces a fixed price. Competition is offset only by non-economic factors—state regulation, wars, the dismantling and opening of socialist countries for plunder and the discovery of new resources in the Third World for exploitation. Even so, in any profit-driven society, dog-eat-dog competition is at work underneath whatever else may provide temporary reprieve.

Knowledge itself is property. Without advanced technology, no capitalist firm has a chance. In China, the days of science by the masses and for the masses are no more. The technical elite was rallied to capitalism with promises of power, prestige and money. In turn, the technical elite used its know-how as power for the capitalist counterrevolution.

Finally, a most obvious feature of capitalism is the conspicuous consumption of the wealthy. Fox Butterfield has detailed the privileges of the elite in China, particularly that of the military and party. He suggests that these privileges were long existent (yes, even while Mao was alive) and tended to increase over time. This will not be contested, since the existence of extremes of privilege and black market wealth confirm the existence of the material base for counterrevolution. However, again, production, not consumption is the main subject here. Distribution is only considered to the extent that the class in power can determine distribution policies, more or less, depending on the relative strength of the classes. The extent that distribution policies can add up to class polarization in the long run is also of interest.

The popular criticism of how party bureaucrats see to their personal interests is not a major part of this book; although, individuals like the Sichuan provincial party secretary obviously have personal interests in the success of state capitalism: “should the State financial revenue drop due to our failure to do a good job in experimentation, I will be the first to have my salary reduced.”

In general, the consumption of the state capitalists is not as significant and conspicuous as in the days of Rockefeller and Vanderbilt, but this only throws off the bourgeois economists and vulgar Marxists who are overly concerned with consumption. The surplus does go to the state capitalists, but it also goes to the new middle class, the military which is modernizing along Western lines, the training of researchers totally removed from production, bonuses and to waste above all. The Chinese might try to do without so much waste in the future by going to free market capitalism or even by trying a more centralized version of state capitalism as in the Soviet Union. Capitalist consumption would increase in the first option and Chinese investment overseas, which has been recently legalized, might serve as another outlet for surplus in either case.

State capitalism is here defined as a system where appropriation of wage laborers’ labor by the non-laboring personnel of the state is predominant. For this to be possible it is necessary that there be some commodity relations in the economy. There would be no wage labor if agricultural and industrial workers either consumed or disposed of their own product. Production for use is contrary to commodity relations. Therefore, production for the goal of profit or the maintenance of a sales level for instance requires the existence of commodity production.

For the sake of application to China and the Soviet Union, and for its general familiarity, state capitalism is defined here partly by its pursuit of profit as opposed to some other goal involving commodity relations. Finally, it is asserted that there must be a mechanism in state capitalism for the enforcement of the pursuit of profit or other exchange-oriented goals. In competitive capitalism that mechanism is bankruptcy and mergers. Monopoly capitalism’s competition enforcement mechanisms include mergers, financial takeovers and war. State capitalism’s competition enforcement mechanism is state-sponsored reorganization involving shutdowns, mergers, takeovers and price control. War also remains a mechanism for state capitalist competition on a global scale.

Indeed, war is far and away the most important mechanism of competition in the age of capitalist imperialism and is here part of the very definition of monopoly capitalism and state capitalism. Briefly stated, capitalism requires five things—workers, capitalists, commodity relations, profit as a goal and a mechanism enforcing survival of the fittest in terms of exchange value.

Socialism’s similarities to state capitalism make for its fragility and concerns relating to the transition from capitalism to communism. The fact that there remains a state and ruling party under socialism leaves open the possibility of the development of a state capitalist class apart from the interests of laboring people. Furthermore, under socialism wages in terms of money or even points ensure that there are commodity relations under socialism.

Several important policies differentiated Cultural Revolution China from state capitalism. First, although there was a ruling communist party, that party was composed of and supervised by laborers. Cadres in the countryside were required to spend a certain portion of the year in agricultural labor—100 days for commune level cadres, 200 for brigade level cadres and 300 for team cadres. Industrial cadres were also required to participate in production. Workers organized in inspection committees supervised the managers and firms were run by revolutionary committees composed of party members, administrators and workers. Secondly, there was no mechanism enforcing survival of the fittest in the marketplace. Profit was not the index of a firm’s performance either. Political policies concerning the role of the party, government and masses and the economic goals of enterprises established a fine line between Cultural Revolution socialism and state capitalism.

Given this definition of state capitalism, the author will establish that China fulfills the necessary and sufficient conditions for state capitalism. After we establish China’s fit to the definition, Marxist theory of capitalism leads us to certain expectations of current China.

PREDICTED SOCIAL OUTCOMES IN STATE CAPITALIST REVOLUTION

Coercive social relations, especially in regard to wage labor, war bloc alliances, expanding income differentials, an exacerbated division of labor, greater trade, the end of mass-mobilization in economic and political affairs and the anarchy of production are all expected from capitalism.

Also expected are the feverish pursuit of the most advanced technologies in order to produce the cheapest and most superior products, unemployment of labor-power and other resources as a result of the pursuit of the most advanced techniques of production and the loss of a rational match between needs and production in the economy as a result of production for exchange instead of use. The necessity to pay a subsistence wage means that capitalists can only make up so much of a technological disadvantage with low wage labor. Superior techniques of production minimize labor costs too, so advanced technology is an absolute advantage in any case. When capitalists can get away with what is called super-exploitation, certain techniques of production will not be used at all unless capitalists can hire workers who are reproduced by means other than wage labor—i.e. by the workers’ life in a pre- capitalist mode of production. All of this means nothing but misery for laborers.

The chapter on politics gives the historical roots and a political theory of how capitalism was restored in China. Everything that follows the chapter on politics either establishes that China fulfills the above definition of capitalist class relations or has had social outcomes expected under capitalism. Proving the existence of certain expected outcomes under capitalism also tends in many cases to prove that China’s class structure is capitalist. Cause and effect are closely intertwined because history is the object of study here, not a laboratory economy. For example, the exacerbation of the division of labor is both a cause and effect of capitalist revolution in China. Indeed, the post-Mao leaders have openly and consciously set about widening the division of labor, almost as if they sought to increase the material basis for their own existence as a class. Despite some difficulty in separating cause and effect, hopefully readers will find the array of expectations from capitalism wide-ranging, important and interesting.

Those who are familiar with Marxism will not suspect the author of making theories to fit post-Mao Chinese reality after the fact. The predictions of Marxism existed long before 1976, and the author does not claim to prove any theory correct that did not already exist before 1976.

Yao Wenyuan made many predictions about what would happen if people such as Deng Xiaoping came to power in China:

The inevitable result will be polarization, i.e., in the matter of distribution a small number of people will appropriate increasing amounts of commodities and money through some legal and many illegal ways; stimulated by “material incentives” of this kind, capitalist ideas of making a fortune and craving personal fame and gain will spread unchecked; phenomena like the turning of public property into private property, speculation, graft and corruption, theft and bribery will increase; the capitalist principle of the exchange of commodities will make its way into political and even into Party life, undermining the socialist planned economy; acts of capitalist exploitation such as the conversion of commodities and money into capital, and labour power into a commodity, will occur. . . . When the economic strength of the bourgeoisie has grown to a certain extent, its agents will demand political rule, demand the overthrow of the dictatorship of the proletariat and the socialist system, demand a complete changeover from socialist ownership, and openly restore and develop the capitalist system.

Yao wrote this in 1975 in his well-known essay “On the Social Basis of the Lin Biao Anti-Party Clique.” At the time, probably most Western observers considered the essay simply an eloquent statement of Maoist dogma. Nonetheless, each of the above predictions has come true, and while capitalism is not openly restored yet, the demand for Western democracy and economic organization has grown more insistent.

The existence of negative phenomena caused by changes in post-Mao economic organization that Yao predicted is only now beginning to have its impact in Western analyses. The Brookings Institution published a book by Harry Harding that admits that “inflation, budget deficits, excessive investment, and surges of imports” have resulted from the so-called reforms, as well as “crime, corruption, political dissent and cultural experimentation.” Moreover, the new family farming system is responsible for a decrease in resources available for “rural welfare, public health, and educational facilities.” In assessing the “the balance of costs and benefits,” Harding finds that these political problems and others including the rise of economic inequality threaten the reserve of political support that Deng built up with the easy gains of initial reforms.

One of the difficulties of this study is that it relies on translated documents, usually of an official nature, to prove the existence of phenomena that are viewed negatively in normative terms. There is substantial variation in Chinese political and economic thought, but it would be politically unwise and probably normatively uncomfortable for a scholar or party member to publish too many statistics that leave unfavorable comparisons between Cultural Revolution China and post-Mao China. There is also a debate about the validity of various figures collected during the Cultural Revolution and Great Leap. It is a widespread practice to list figures from the 1950s and years since 1979 without any figures from the Cultural Revolution or Hua Guofeng period. Sometimes there will be a figure from the Great Leap, or figures from the early sixties. 1965 is a favorite year for including. After 1965, however, it is likely that the next figure will be from 1978 or 1979. Sometimes, the researcher gets lucky and finds the figures needed. Other times it is possible to infer trends from figures available. It is impossible to avoid a patchy look to figures gathered and reported, but on the whole the author does not believe that the difficulties of doing a critical analysis that relies on official documents are insurmountable.

Of course, one of the main claims of the current regime is that it has accelerated economic growth. In the eight years from 1979 to 1987, the CCP claims that GNP, state revenue and per-capita income all doubled. Although there are voices to the contrary, it is seems likely that both claims—fast growth and faster growth than during the Cultural Revolution—are true, especially for the short run.

In assessing the claims of the post-Mao CCP, it is important to keep one’s feet firmly rooted in physical reality. Many studies are coming out that are denominated in monetary terms. Often these studies are even more distorted by commodity fetishism than corresponding Western studies because they do not correct for inflation. The author did not begin to address all the serious methodological, historical and comparative flaws found in many influential Chinese and Western economic studies. Instead, the author has selected to cite data with as few such flaws as possible and ignore much of what is common currency in Chinese and Western economic circles. Despite this winnowing process, there is an abundance of materials in Chinese economic writing that is useful, particularly for the methodological and theoretical framework employed here. Chinese economists continue to use some Marxist categories and hence present significant information that Western economists generally would not think of asking for. Even the hard-core “reformers” among the economists are eclectic enough that they are bound to make statements of some use in analyzing the Chinese economy. Certainly the economists of the State Council do not waste time with purely theoretical exercises.

The study of capital is not the study of things that can be exchanged or consumed. GNP fixation—a form of commodity fetishism—will not be witnessed in this essay: the author will concede to opponents the correctness of any prediction regarding the Chinese GNP.

Capital is not even characterized by the relationship between the productive forces and relations of production. Capital, in the Marxist analysis, is a social relation. Capitalism is a system of social relations. This book is about class relations—relations between groups of people. State capitalism is a system of capitalist social relations where leaders in the superstructure—mostly the bureaucracy, army and party, but also academia, art and culture generally—appropriate the labor of wage laborers.

There is no need for the capitalist to privately consume anything. As Sweezy has pointed out, Marx spoke of social capital in reference to corporations.

Capital, which rests on a socialized mode of production and presupposes a social concentration of means of production and labor powers, is here directly endowed with the form of social capital (capital of directly associated individuals) as distinguished from private capital, and its enterprises assume the form of social enterprises as distinguished from individual enterprises. It is the abolition of capital as private property within the boundaries of capitalist production itself.

Although China competes with capitalists from other countries, it is quite enough that local state capitalists compete with other local state capitalists and that the local government competes with the central government for revenue and enterprise control. With the potential of a one billion person domestic market, China’s capitalism just might be headed all the way to competitive market capitalism, so that Yao Wenyuan’s prediction on this score may yet come true.

“State capitalism” is an unfamiliar term to those not initiated in communist studies. Although Engels used the phrase, splinters from the Trotskyist movement applied it to the Soviet Union of Stalin’s day. Many anarchists apply it to every Leninist governed country. Mao referred to the Soviet Union as social-imperialist and capitalist thanks to Khruschev and subsequent state capitalists. Given the difficulty that the analysis presents to the uninitiated, it is advised that the reader skip right to the chapter on class relations or the chapter on science.

The chapter on class relations is about concrete changes in China’s economy. Hopefully it makes clear what is at stake. Only after the rest of the essay has been read, is it advised that the reader undertake the chapter on the political counterrevolution, which is bound to sound strange and unreal to those not acquainted with Chinese politics. Then, hopefully it will make sense where the recent changes in the Chinese economy came from—a political and social counterrevolution.

SOCIALISM

What are the alternatives to capitalism or imperialist domination? Concrete policies of socialism in addition to the obvious large-scale collectivization of agriculture and industry that Mao put forward include despecialization, mass participation, distribution policies to overcome the urban/rural division of labor and self-reliance.

There is no Maoist model of socialism, only political principles and historical examples such as Shanghai under the Four or Dazhai and Daqing. Socialism was created in the case of China through experimentation—in practice. The Maoists were too historically minded to speak of a checklist of concrete policies that comprise socialism for any time or place.

Maoist practice is not easy for most academics to trace. Maoism includes an ideological vision of classless society free from the lethal conflicts of imperialism and other “antagonistic contradictions.” However, political principles are historically contingent too. Politically, the Maoists decided it would be a mistake to try to live without a state or organized party while U.S. imperialism and Soviet social- imperialism still threatened China. Many of the goals of pure communism had to be put off under Mao. So there is a strategy based on political principles that themselves are based on “summations” of recent history.

At each particular moment within the strategy there is a correct tactic for accomplishing the more permanent strategic objectives on the way to communism. At the tactical level, Stalin and Mao in particular have come under heavy criticism from bourgeois academics and Trotskyists. For example, both bourgeois academics and Trotskyists criticize Stalin’s Non-Aggression Pact with Hitler. This pact was a momentary and tactical decision within Stalin’s eventually victorious strategy. While letting the imperialists fight, he rebuilt his recently purged officer corp and built military industries in the hinterland. Another example is Mao’s promise to Truman to have an American-style constitution. Most typical of all for the arguments in this paper is Mao’s appointment of his enemy Peng Zhen to lead the Cultural Revolution in the Cultural Revolution Group. Peng Zhen was appointed as a temporary measure so that Peng could expose himself as he did by revealing his views, not because Mao was confused by complexity or because he was a hypocrite. Without distinguishing tactics from political principles and strategies, one is likely to see the trees but not the forest.

Someone like Roderick MacFarquhar is good at pointing out the complexities of Mao’s fight for socialism. Unfortunately, serious scholars like MacFarquhar pooh-pooh the black hat, white hat approach to the two line struggle adopted in this book. Consequently, many temporary measures adopted by Mao, and his enemies for that matter, appear as strange or hypocritical in the work of the more historically minded scholars.

Since it was only immediately after the Great Leap that there was a real split in the Chinese Communist Party (CCP), the author did not try to refute MacFarquhar. As MacFarquhar admits, he is trying to make use of recently released material in his assessment of the origins of the Cultural Revolution: “What is the effect of the new materials? Clearly devastating for anyone who may have swallowed whole the version of history purveyed during the cultural revolution. More importantly, it restores light and shade to the uniformly black-and-white picture depicted by the cultural revolutionaries.” In this sense, MacFarquhar is a revisionist historian.

The author believes with MacFarquhar that “the period 1959-65 was complex” if only thanks to issues of strategy and tactics; however, the author also believes that the material from Deng’s regime proves better than any Red Guard ever could that Deng was a counterrevolutionary and state capitalist profoundly opposed to Mao Zedong, as was Liu Shaoqi, who Deng and others now quote so openly. As MacFarquhar’s series on the origins of the Cultural Revolution, gets closer to the Cultural Revolution and present, the author’s thesis and MacFarquhar’s will probably appear diametrically opposed.

In the case of Trotskyist Oxford scholar Nigel Harris, the temporary expedients of the New Democracy period come under attack as hypocritical. Harris refuses to take seriously or explain Mao’s theory of two stage revolution. Thus, while Harris goes through vast quantities of history, his attack on Mao and China as state capitalist is ahistorical. He quotes Li Li-San as Mao without mentioning the historical context of the struggles between the two. Furthermore, he compares British and Chinese living conditions. If hard-core followers of Stalin and Mao tend to lump Trotskyists with bourgeois academics and capitalist-roaders, Harris provides them justification by speaking favorably of the West’s productive forces, democracy and other practices while at the same time supporting Liu Shaoqi. Attacks on Mao’s individual acts that do not account for Mao’s ideas about mass line, strategy, tactics and two-line struggle are bound to be ahistorical.

With the proviso that Mao’s political principles and strategy are based on historical summations, especially those concerning the Soviet Union and the Chinese CP, a listing of the political principles of the Cultural Revolution alternative can be ventured. Socialism will be defined as a long historical epoch of class struggles in transition between capitalism and classless society (communism). Socialism is necessarily characterized by the all-round dictatorship of the proletariat over the bourgeoisie, which primarily resides in the party and government.

The policies of socialist dictatorship must include the restriction and elimination of the Law of Value including the bourgeois right of “to each according to his work,” which is to be replaced under communism with “to each according to his need.” Furthermore, the proletariat must restrict the division of labor or adapt production in such a way that class polarization is restricted and reversed. If the concept of market is extended to labor markets internal to production teams that offer more pay for more work, then restriction of the Law of Value can be thought of as restriction of markets.

Promotion of the Law of Value may not always indicate capitalism, but in this definition promotion of the Law of Value is enough to disqualify a society from the category of socialist. Also, the control of the division of labor does not amount to only the restriction of the Law of Value unless the concept of bourgeois right is extended to things like the prestige and power attendant to certain jobs valued in capitalist society. Even where all workers receive equal pay for equal work, the practice of entrenching experts in jobs like that of factory director is a non-socialist practice. If no attention is paid to the division of labor and/or the Law of Value, in the long run, power, income and/or prestige may accumulate and bring about a change of institutions—a change that may include the institution of the appropriation of surplus from wage laborers. “Socialist” is a hard word to live up to and by this definition there are no socialist countries in the world anymore.

There are several policies that help with the task of building socialism. Wheelright and McFarlane have described one as despecialization—the making of production accessible and understandable to all. This process goes along with accomplishing production tasks with ideas from the workers instead of by complicated technologies that often mean placing valuable resources and power in the hands of a technical elite and importing expensive equipment from Western countries. Despecialization makes participation of workers easier; serves to break down the division of labor and helps employ existing resources independent of the state-of-the-art technology. This point will gain further attention in the section on science and technology.

Moreover, since production processes are more accessible, problems of management are easier to solve. There are fewer chances of a breakdown in information flow from the localities to the center. Therefore, planning is aided. This is different from the policy of decentralization which the Chinese are adopting now. Decentralization today is the acknowledgment that local and national interests are clashing and that either the national government or the local government is vying for position and particular interests. The larger good is overlooked. In Bettelheim’s words the current “decentralization in fact consists of a redistribution of powers within a state bourgeoisie.” At the same time power shifts to the managers. The Chinese had previously criticized decentralization of this sort. There is no reason there can not be local initiative with information flowing to the center and back unless property relations have entered the scene.

Indeed, China’s current reforms, as will be seen, just amount to decentralizing power from central government technocrats and giving that power to local technocrats. The recent decentralization represents a clampdown on the remainder of the mass initiatives—the disbanding of the revolutionary committees in favor of one man management for instance. Thus, the decentralizations since the early 1970s have often coincided with a decrease in local initiative.

Mass participation in the economy and state affairs were goals in themselves during the Cultural Revolution. Mao saw that the masses would raise their own level if given the opportunity in practice. Mao held back the army, party and government as well as he could from 1966 to 1969 to aid the revolutionaries in their quest for experience in revolutionary administration. The same was done by criticizing the ivory-tower experts. The experts were encouraged and economically coerced to help the masses at the grass roots levels. The masses learned to solve their technical problems themselves, thus raising their own scientific level. Mao believed in letting the masses run their own affairs in ever more thorough ways. He saw that otherwise the capitalist-roaders, experts, and bureaucrats would run away with the state and economy.

The largest possibility for detrimentally uneven development is and was between the city and countryside. Here again, the policy was to freeze the income of the city workers and spread local industries in the countryside. The city workers were not lowered to the conditions of peasants and the peasants were not coerced into raising their economic status solely by their agricultural efforts. A large portion of China’s surplus went to establishing industry in the countryside.

At bottom these policies are all concentrated in self- reliance. Only by self-reliance could the broad masses of people raise their own political and economic levels. Any other method amounted to dependence and the fragmentation of society based on the division of labor. Mao saw his task as making this self-education possible: “the only method is for the masses to liberate themselves” and “Let the Masses Educate Themselves in the Movement” was one of Mao’s Sixteen Points. Undoubtedly, the throwing of the state and economy into the air to be taken by those who mobilized public opinion alienated many people unprepared to understand the resultant struggle and confusion. They were almost uniformly forgiven in the policy of “cure the illness to save the patient.” Even more than 95% of the cadres were seen as undeserving of punishment, which was reserved for those few people who really held power and consciously used it for the benefit of an elite. Mao was knocking down the enemy one by one and allowing every chance for political rehabilitation. At the same time, millions rose to his challenge to learn profound lessons about really running their own lives.