China: a state of transition

Andy Ford’s contribution to Socialism Today’s debate on China (Socialism Today No.131, September 2009) raises important theoretical questions about the class character of the state. LYNN WALSH replies to his points.

ANDY’S POSITION IS that "the Chinese state is still a deformed workers’ state" which has "not yet gone through transition to capitalism". (A ‘deformed workers’ state’ being a state in which the commanding heights of the economy are nationalised and run under a plan of production, but where the state is run by a privileged bureaucracy and there is no workers’ democracy.) Yet Andy’s own qualifications actually tend to undermine his characterisation. "Capitalism has been let loose" in China and it is a deformed workers’ state that is "uniquely and extensively deformed". Reliance on the market (the NEP-type process) "has probably gone too far to be reversed…" (The New Economic Policy was a partial retreat to market measures in soviet Russia during 1921-28, following the highly centralised policy of ‘war communism’ during the civil war 1917-21.)

Andy accepts that "a capitalist overturn is more or less inevitable in the future", but maintains that "this does not mean that the country is capitalist now". The crucial issue for Andy is that a state cannot change its form, from deformed workers’ state to capitalist, through "gradual evolution" or "peaceful evolution": It requires a "social counter-revolution", a "huge confrontation between the working class and the nascent capitalist class" to bring about a transfer of power from one class to another. Conditions for such a confrontation are being prepared, he argues, but the transition has not yet occurred.

In our view, however, the process in China is more complicated (as we have argued in previous articles in Socialism Today: China’s Future, by Peter Taaffe, issue no.108, April 2007; The Character of the Chinese State, by Lynn Walsh, issue no.122, October 2008). China is in transition, moving from a nationalised, planned economy towards capitalism, but is not yet a fully formed capitalist state. Most of the workers’ and peasants’ social gains from the 1949 revolution – health care, education, housing, job security for workers – have been wiped out. Since Deng Xiaopeng opened the door to rural businesses (township and village enterprises) and foreign firms (mainly in the coastal zones, to begin with), the state has promoted the growth of the private capitalist sector. China is no longer a planned economy, but substantial elements of state banks and industries remain.

Through the remaining state sector and through the political power of the state (a party-state, a combination of the state apparatus and the ruling ‘communist’ party), the regime exerts a powerful directing influence over the economy. Moreover, the party-state, developed under Mao Zedong and now adapting itself to new conditions, uses its massive repressive apparatus to suppress opposition and protest and to maintain itself in power. Holding onto power is its overriding objective, and the party-state regime has promoted changes in the economic relations in order to create a new base for its continued rule. Both the state and the economy have a mixed character, combining features of the Maoist state (originally modelled on Stalin’s regime in the Soviet Union) and a capitalist state (modelled on capitalist ‘development’ states like Japan and South Korea during the post-war economic upswing).

Political revolution

FROM THE STANDPOINT of established Marxist categories, this is undoubtedly a peculiar development, but we have to apply our theory to actual social developments. The Chinese working class is as yet politically weak. At the same time, the emergent capitalist class fears both the dispossessed peasantry and the growing working class, and is not confident of taking power into its own hands. Under these conditions a powerful, bonapartist state is playing a relatively independent role, attempting to direct social change from above, advancing incrementally towards capitalism without provoking a social explosion from below.

Andy rightly says that, if we change our analysis or modify previous characterisations, we should explain why we have changed our approach. As he says, however, "the recent changes in China are a new development requiring a Marxist explanation". Theoretical characterisations reflect or encapsulate real social relations and when those relations change, as they inevitably do, new characterisations have to be worked out – and, of course, explained.

Arguing against the idea of incremental change of the regime in China, Andy refers to Leon Trotsky’s 1933 article, The Class Nature of the Soviet State (Collected Writings 1933-34). Given the further degeneration of the Stalinist regime and the Nazis’ victory in Germany (mainly due to the Stalinist policies followed by the leaders of the German Communist Party), Trotsky no longer had the position that the bureaucracy could be reformed: the restoration of workers’ democracy required a political revolution, the forcible overthrow of the bureaucracy. At the same time, Trotsky did not accept that "the soviet government [had] been gradually changed from proletarian to bourgeois…". The gains of the revolution, secured through three years of civil war, were burned into the consciousness of the working class. There could not have been a counter-revolution without a "catastrophic transfer of power", another civil war.

Andy applies Trotsky’s position to present-day China. But the situation in China today is entirely different from the soviet state in the 1930s and 1940s. Internationally, it is a different period.

Trotsky was writing only 16 years after the October revolution, when the molten lava flow of the revolution had not completely cooled. The planned economy was producing economic gains (despite the brutal methods of the bureaucracy), while world capitalism was plunged into the crisis of the great depression. Counter-revolutionary moves to restore landlordism and capitalism would, at that time, undoubtedly have provoked mass resistance from the working class, resulting in civil war.

Trotsky’s main perspective was for a political revolution: the overthrow of the bureaucracy and the restoration of workers’ democracy. But he also recognised that if the working class failed to carry this through, the Stalinist bureaucracy could give way to counter-revolution and the restoration of capitalism.

Capitalist restoration

THE SITUATION IN the Soviet Union in the period before the collapse of Stalinism after 1989 was very different. The planned economy was imploding under the weight of bureaucratic mismanagement, while capitalism internationally appeared to be successful. This undermined the social base of the bureaucracy, internally and on the international arena. At the same time, the totalitarian repression under Stalinism, with a complete lack of independent workers’ organisations, led to an atomisation of the working class. This was the background to the counter-revolution that swept through the Soviet Union and eastern Europe after 1989.

The programme of the political revolution remained valid, and there were elements of the political revolution as sections of the more conscious workers moved to democratise the planned economy. But the working class proved too weak politically to prevent a return to capitalism. Sections of the bureaucracy, in collaboration with the capitalists internationally, were able to carry through a counter-revolution without a civil war in the Soviet Union and most of the former eastern European Stalinist states (with exceptions like Romania, Albania, etc). Pro-capitalist forces were able to use the mass, ‘people’s movement’ for democracy (in reality, the semblance of capitalist, parliamentary democracy) as a cover for the re-introduction of capitalist economic relations (dominated by the oligarchs).

In the case of the Soviet Union/Russia, this was carried through very rapidly by ‘shock therapy’, sweeping privatisation and the decisive shattering of former Stalinist state apparatus. Because of the economic collapse and political degeneration of Stalinism, there was little resistance, except from die-hard sections of the bureaucracy. The balance of class forces in the Soviet Union and internationally was different from the position that prevailed in the 1930s and the following period.

Taking a different course

THE SITUATION IN China from the late 1970s (when Deng began his ‘reforms’, with the introduction of market relations in the countryside) was also very different from the situation in the Soviet Union in the 1930s, and also different from the Soviet Union in the 1970s and 1980s. The transition towards capitalism in China has taken a different course from Russia and eastern Europe.

The Chinese revolution of 1949 was a transformation of great significance. As Andy says, the revolution was deformed from the beginning, directed from above by the leadership of the Red Army on the basis of a mass movement of the peasantry. The working class was forced to play a subordinate role, and the state was not based on workers’ democracy as in the first period of the Russian revolution. Nevertheless, landlordism and capitalism were abolished, and the nationalised, planned economy resulted in significant social gains for the workers and peasants. Through mismanagement and disastrous policy zigzags (like the ‘Great Leap Forward’), the bureaucracy under Mao squandered the gains of the planned economy.

By the late 1970s, as in the Soviet Union, the economy began to flounder. In 1978, Deng initiated market measures in the countryside, probably with the intention at that time of shoring up the planned economy, but nevertheless opening up capitalist market relations in some sectors of the economy. Objectively, this was the beginning of a path heading in the direction of the restoration of capitalism. However, the CCP leadership was determined to maintain the party-state, its instrument of power, in one piece and manage a transition towards a market economy.

Initially, the regime opened up market relations in the countryside and the coastal zones alongside the state sector, without extensive privatisation. Large-scale privatisation came later, though the major banks and key sections of strategic industries have been kept under state control (even when they have been ‘corporatized’ as joint stock companies). The regime avoided ‘shock therapy’ (sweeping privatisation) and the shattering of the former Stalinist state.

In this way, the Chinese leadership (based on the party-state) has moved step by step, incrementally, in the direction of capitalism (this analysis is set out much more fully in The Character of the Chinese State, Socialism Today no.122, October 2008). The regime has faced mass protest from the peasantry, the dispossessed people forced to move from the land into the cities, and from super-exploited workers. But the political weakness of the working class at this stage, with no independent mass organisations or political leadership, has allowed the regime to proceed.

In chapter 11 of The Revolution Betrayed (1936), Trotsky outlines two paths for possible counter-revolution in the Soviet state. Rather than (1) "the path of abrupt counter-revolutionary overturn", the movement towards the restoration of capitalism in China has proceeded along (2) "the path of successive shiftings". There has been a series of shifts, from freeing of farm prices in 1978 to recent privatisations. The CCP officially embraced the market and welcomed capitalists into its ranks. The savage Tiananmen Square massacre in 1989 initially led to a slowing of market policies, but repression of the protest movement subsequently allowed the regime to accelerate moves towards the market. In our view, however, successive shiftings have not yet resulted in the establishment of a fully capitalist economy. China is in transition towards capitalism, but it is still a hybrid formation, part state-controlled, part capitalist market economy.

An exceptional state

ANDY ARGUES THAT capitalism has been "let loose" within a deformed workers’ state, "capitalism co-exists with a deformed workers’ state… still ruled by the bureaucracy of the CCP". The crucial question, Andy says, is "which class controls the state".

Part of Andy’s argument is that "the state is always a class state, and serves the economically dominant ruling class". From the standpoint of Marxist theory, this is generally true. But with any generalisation, there can be exceptions, and under certain circumstances the state may play a more independent role.

The Chinese party-state was never under the control of the working class. It was a bonapartist state from the beginning. From the time of Deng’s reforms, it has step by step introduced market relations, undermining the nationalised, planned economy and wiping out the social gains of the workers and peasants. This has deeply eroded the social-economic basis of the deformed workers’ state established by the 1949 revolution. At the same time, the regime has fostered the development of a capitalist class, but not conceded political control to the emerging capitalist class (which mostly relies on state sponsorship, fears the growing working class, and is in no hurry to introduce parliamentary-style democracy). The former Maoist party-state apparatus has been adapted to run the new hybrid economy. In this period of transition, the state balances between the class forces, controlled neither by the working class nor the emerging capitalist class.

Clearly, this situation cannot last indefinitely. It would be a mistake to see the party-state itself as a permanent supra-class formation, let alone a new class in its own right (the mistake made by those in the 1930s and since who have seen the Stalinist bureaucracy in the Soviet Union as ‘state capitalist’ or a new ‘bureaucratic collectivist’ formation). The Chinese regime is a temporary, transitional phenomenon.

Assuming the continuation of the shift towards a more fully developed capitalist economy, the capitalists – now in the process of forming into a class – will at some point begin to demand political representation and control of the government. This may well involve a clash between the emergent capitalists and the state machine. On the other hand, continued economic development will produce a strengthened working class that will become more combative and organised, challenging the domination of both the bureaucratic state and the capitalist class. In the future, there will be a much sharper class polarisation in China between the reborn bourgeoisie and the proletariat.

In the state-owned sector, there will be a struggle for democratic workers’ control and management, while in the private sector the demand will be for nationalisation under workers’ democracy. A mass struggle for such a programme would set the Chinese revolution back on course, with the aim of establishing a planned economy under the democratic control of the workers and peasants as part of a worldwide struggle for socialist transformation.