The Chinese Puzzle

Socialism with Climate Characteristics

[Fred Engot (Chinese name : Yang Heping) was born in Beijing in 1952 and grew up in the years after the founding of the People's Republic. He witnessed what happened in Maoist China. He is also a witness to what is happening post-Mao China.
Onurcan Ülker, a Turkish, was born and grew up in Turkey. He developed interest in Marxism and social movements at an early age.
Onurcan interviewed Fred Engst on April 7, 2017 at Beijing over the struggle for actually building socialist society in China. He spoke at length with Engst about allegations and counter-allegations levelled by western critics in respect of Maoist and post-Mao China. We publish below some excerpts from the longish talk dealing with why Chinese market miracle was socialism.—Fr] 

Onurcan Ülker:  In post-Mao era, socialism was somehow reduced to economic development or simply GDP growth in Chinese official discourse. As we know, for Mao, socialism was much more than that. What he had in mind as gradual transition to classless society was also a process of establishing direct democracy of the toilers. So my question is: was this really the case in Maoist China?

Fred Engot:   Of course. Defenders of Mao-era policies can dwell on the democratic aspect of them. But we should not fail to counter the total misconception of the capitalists who say economic growth is faster in the post-Mao era. That is utterly untrue! In the last few months, I looked through data from the National Bureau of Statistics of China (NBSC) to compare the growth rates. Yes, GDP is one measurement. But instead of using GDP, I measured grain production, cloth production, railroad transportation, power generation, coal production and some other basic components of economic growth. To my astonishment, other than cloth production and the GDP figure the speed of industrial development during Mao's era was much higher than the development during Deng's era. The truth is GDP was non-existent during Mao's era and was fabricated by later officials. Also, in Mao's era, service sector was not counted!

In Mao's era, we had dormitories, cafeteria, nursery, libraries, trade school and so on in a factory. All these things are not counted as a part of GDP. But when you break them up, they all start to contribute to GDP. So, when this fact is taken into consideration, it can be seen that even during the supposedly "chaotic" last ten years of Mao's era, the speed of development was faster than or at least equal to the speed of development in post-Mao era. Here are the facts.

In my analysis, I did not use potentially miss leading measures like "gross output" I just looked at how much cloth was produced, how much steel was produced, how much power was generated etc. These kinds of measures run no risk being double counted. I also excluded data for 1949-1951 to account for the devastation caused by the Revolution-a necessary period of recovery for Mao. So, I took data from 1952 to 1976, and then compared that with Deng's period and beyond. Results are astonishing. While talking about Mao's period, most people just say the people were sacrificed. This is empty talk, nothing more. Only by making people the masters of society can you have such rapid economic development!
Compared to other economically underdeveloped countries like India or Brazil, the recent economic development of China under capitalism also very fast. This cannot be denied. That's why people keep talking about the "Chinese miracle" today. But the thing is economic development under socialism is faster. Note a simple fact in the history: after Soviets crushed the reactionaries in the Civil War, from 1921 to 1941, Russia went from a backward industrial society on me outskirts of Europe to a highly industrialised super-power. A span twenty years immediately after a devastating war. Compared to the Soviet Union, what happened to China in the last 40 years was nothing. Like in the Soviet Union, socialism achieved a remarkable economic success in Mao's China. So it is a fallacy this economic growth was sacrificed during Mao's period to make people feel better. This is not true.

Moreover, in Mao's China not only the development of production was much faster in the post-Mao era, but also people had gained the belief that they were the masters of society. That was the very reason for the 1989 crackdown. People went out into the street in massive numbers to protest because they thought the government belonged to them. This was the spirit of the Cultural Revolution! How ever, this very basic fact about the uprising has been totally ignored by the mainstream scholars.

OÜ:  Actually, many other developing countries also went under a market-oriented reform process especially from mid-1970s. But today, we only talk about the "China model" as a "success story"; all other "models" promoted by international financial institutions in the past have already collapsed. What is the main reason of this? Do you think the claim of mainstream economists—that post-Mao economic development in China is proof of the superiority of the market economy over the so-called "command economy"—makes sense? Could the relative success of the market-oriented transformation in China ever have been achieved without the independent heavy industrial basis established during Maoist era?

FE:   It is so interesting. Mainstream economists so clueless about development. The reason means, Third World countries have hard time developing is because imperialism. Imperialists, multinationals trample over any development effort that could challenge their monopoly power in Third World countries. The only reason that China was able to rise is because in the era of imperialism it maintained its sovereignty. The economic base built in Mao's era laid the foundation for a sovereign capitalist development. That is the main reason! Even today, look around the world, which country does not have foreign troops? Which country has sovereignty military, politics and economics? Only Russia and China. India, maybe, has just a little bit. Without understanding the logic of economic development in the imperialist era, you will remain clueless about why China could be able to develop.

So basically, it is the irony of history: to develop on a capitalist basis, a Third World country needs socialism first. Mao once said, "Only socialism can save China," We can add now; "Only socialism save capitalism in the Third World." If you want to develop capitalism in a Third World country in the era of imperialism, you can do that only by breaking with imperialism and having a sovereign economic development. Only then, can you build a coherent, national economic base strong enough to emerge to check world economy.

OÜ:  This sounds like what Samir Amin calls "delinking".

FE:   That's right You need to delink to have an indigenous economic development. The only possible way to do that is to have socialism first. By opening up in 1949, China would not be different from the Philippines today. And it would not be much better than India. India's economy is supposed to grow, but it has no maintaining power. China's relative economic success after Reform, compared to other Third World countries, is because it has sovereignty. It has an industrial base. It decides the sectors in which multinationals are allowed to operate. In some sectors such as energy, transportation and finance, the Chinese government does not allow multinationals at all; and in other sectors, such as automotive, it only allows them as part of a joint venture. Foreign companies do not want to be in a joint venture; they clearly prefer solely-owned subsidiaries. But China says: "Well, that is the condition. Take it or leave it. If you want to come in, you gotta have a joint venture."

But if the Chinese started joint ventures in 1949, what could they do? They didn't have anything! However, by the time I left China in 1974, every province in the country was able to make trucks. Their quality was not that good; they had to send a technician for every truck they sold to fix. But still they had trucks! When you have it, you can improve it. If you don't have trucks, then you have nothing to work on. So, with every province having truck building industry, when multinational companies came in, they were asked to have joint ventures. Chinese said: "Well, I can make the frame; I can make the tires; I can build the seats. But I need your engine; I need your transmission. Your engine and transmission are better than mine. Anything else I can do; I can even do better." That's how a joint venture works.

So, having a coherent, indigenous, all-around economic base is the key for China to re-emerge in the capitalist world and become a rising industrial power. In absence of this, neo-liberal policies destroy Third World countries. The Philippines was probably adopted neo-liberal policies more fervently than any other country. Today, it has nothing to show for it. Nothing! It is so sad. They cannot even make a pair of pliers, or a nail They can only make the most primitive stuff. What they have in the market are all products of multinationals or cheap imports from China.

OÜ:  Correct me if I'm wrong, but I think what you say, is China still enjoys a sort of sovereignty thanks to the legacy of Mao era. So, how do you evaluate the role of foreign direct investments (FDIs) in today's China? Because FDIs have long been considered as an important driving force of China's rapid GDP growth in post-Mao era.

FE:   I think this view is really far-fetched. I mean, the reality is far from that. FDI does play some role in China, but I think it is overplayed by most scholars. What China actually does is steal technology. China taxes significant advantage of its ability to piratting technologies. The reason China has been developing much faster than other Third World countries is because it uses the strength of its sovereign base-in economics, politics, and the military-to narrow the technology gap and innovate rapidly. You can do a leap forward; you can take the shortcut. Instead of starting with the landlines, you can go straight to mobile. Instead of starting with the VCRs, you can go straight to VCD or DVD recorders. Even the Chinese film industry totally depends on pirating Hollywood movies today.

Let me clarify my point with examples: McDonald's, for example, came in. Chinese learned from that. Today, Chinese fast-food industry kicks the ass of McDonald's. Or FedEx came in. Now, it has already been beaten by Chinese express delivered companies. The examples can be multiplied. But the thing is, what makes these possible is that you have sovereign control over the key sectors of your country.

OÜ:  How about domestic contradictions, for instance, contradictions stemming from the commodifica-tion of labour in post-Mao China? Do the living and working conditions of China's new working class, especially migrant workers, pose a threat to the sustainability of this economic model?

FE:   Here, there is also another tremendous gain from Mao's era that scholars often tend to overlook. They just don't know what is the key to cheap labour in China. They say, it is because the size of the labour force. Or they say, it is because population structure has a lot more young people in China. But we have that in other Third World countries too. How come China enjoys cheap labour, but others having very cheap labour cannot even exploit it? It is very ironic. Mainstream scholars and news media in the West are not coherent in explaining this fact.

It had long been a puzzle for me too until I went to the Philippines. I went there three times, talked to people there, tried to understand the social reality of that country. When I contrasted the Philippines with China, I saw what differentiates China is the legacy of land reform. Land reform gave each Chinese peasant a piece of land. This is the key to cheap labour in China. If you compare the official minimum wage in China and the official minimum wage in, for example, the Philippines today (I don't know much about India), you cannot see a huge difference. A lot of people in the Philippines live on this minimum wage and they live in poverty. But Chinese workers with more or less the same wage are much better off. Why is that? Mainly because in places like the Philippines, landless peasants are forced out of the countryside, they come to the cities, start to live on the minimum wage, and that wage has to support the whole family. Care of the young, care of the old, all depend on this wage. But the families of Chinese migrant workers, farmers who come to city to make a living do not totally count on their wage. They have land back home. Raising youth and caring for the old in the countryside have almost zero cost. So, it comes to the point that if the process of working class reproduction is carried out in the countryside, the cost is reduced substantially. But if you move to an urban centre as a landless peasant, the expenses housing, schooling of the youth, caring for the old and so on are much higher. In the Chinese countryside, people in their 60s, 70s and even 80s still work their fields and gardens. They're self-sufficient. They have their own house, their own land. Even if they are not able to work, they have cell phones. They call up somebody to plant, plough or harvest their land. They just manage a little young so old people are not a burden for young people. That is the key to understand cheap labour in China. And what made this possible is the Chinese Revolution of 1949. Without this basis, China would not have this kind of cheap labour. That is what capitalist scholars fail to understand (or avoid mentioning).

Today, the reason why labour costs are rising in China is precisely because urbanization. Local governments and real estate speculators have been forcing farmers off of the land, so they can build industrial areas. And once you force the farmers off of the land to the urban settings, their wage has to be higher than before to make it possible for them to survive. So the urbanisation drive by the government is increasing the cost of labour in China today. This is the irony of capitalism. That's why I feel like only Marxism can understand capitalism. Capitalist scholars, capitalist economists don't understand it.

OÜ:  Let's go back to our previous topic. In Maoist China, almost all basic social services were provided for free or a symbolic fee thanks to the iron rice bowl system in urban centres and the people's commune system in the countryside. However, today, this policy is also criticised by some pro-Reform and mainstream scholars who claim the quality of base services was incredibly low at that time. How was the quality of social services in Maoist China? Did they really improve living standards of Chinese people?

FE:   To make a small correction, not everything was free. You had to be an urban resident; some services were not provided to farmers. Some of them were free, but you had to pay a low fee for some of them. Housing was not totally free, for example. You had to pay a symbolic rent. Education was more or less free. You just had to pay for your books, but the price was very minimal. That's one reason why retro-computed GDP was low in Mao's period. If a service is free, it is not counted in the GDP. There is no commodity exchange here.

Yes, maybe the quality was not as high as today. But if you measure by what was possible, the gains of this system were tremendous. For example, in the countryside, they established the system called "barefoot doctors." This was recognised worldwide as a successful social service.

OÜ:  Even the WHO of the United Nations recommended it to the rest of the Third World...

FE:   Yes, that's incredible! Of course the quality of the service provided by barefoot doctors was not as high as the quality of the service provided by the hospital. But at that time, hospitals were inaccessible for most of the people. Given this fact, condemning the poor quality of barefoot doctors is simply ridiculous! You have to look at what was available. We have to ask people who say the quality of barefoot doctors was poor: what was the alternative to this system? China was a poor country in the process of industrialisation. We never say we were rich in Mao's period. We actually say we were tightening belts, so that we did not feel hungry. It was a poor country after all. So, this charge against Mao's China is totally unfounded!

The policies of Mao's era really made a difference. Life expectancy grew enormously in China. This growth is the fastest not only in Third World countries, but also in the world. To my astonishment, even during the worst period of Mao's era, I mean during "three difficult years," the highest death rate was 2.5 percent. That was comparable to the "normal" of India!

To condemn Mao's era, you have to tell so many lies. That's incredible! In natural sciences, in physics, in chemistry, we have labs to test. People can be subjective. In the social sciences, it is easier to twist the truth. We are all, inevitably, biased as our interest influence what we see but that does not mean one cannot be objective an set out our biases openly. Unfortunately, apologists for capital like Milton Friedman are driven entirely by ideology. For example, I am astonished by the way Friedman developed a passion for "Asian Tigers" to show that the capitalism is superior to socialism. He could only do so by totally ignoring the Soviet experience. He simply selected examples to support his viewpoint.

[source : Aspects of India's Economy, No 74]

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Vol. 52, No. 11, Sep 15 - 21, 2019