Russia versus China. Similarities and differences

Andrew Wedeman (Double paradox. Rapid Growth and Rising Corruption): “Corruption and growth thrived together: Corruption worsened as growth prospered… It was pretty clear that whereas corruption in Japan and South Korea was «structural~ and institutionalized, in China it was anarchic and predatory. Corruption in China more closely resembled cor¬ruption in Zaire than it did corruption in Japan. I thus came up with the notion of the "double paradox": the core issue was not whether one could have corrup¬tion and growth, which we could explain by examining the political economy of the developmental states in Japan and South Korea, but how it was possible to sustain rapid growth given high levels of predatory corruption in which officials seem to be engaged in looting the economy.”… “In post-Maoist, reformist China corruption actually facilitated innovation and entrepreneurship (elements of human capital that were impermissible and indeed prosecutable during Mao’s Cultural Revolution of the 1960s), the expected result might well be higher growth

A badly told history

Was all about a transition of the socialism to Capitalism or a transition from a type of Capitalism to another type of Capitalism?

When we consider a change in terms of “Transition” it is fundamental to clarify the nature of both extreme of the equation: Transition since what point of departure to what point of arrival?

According to the usual stereotype, the exposition of these equation tries to be simple and expeditious: In both cases, as much in Russia as in China, the departure situation was a “Socialist-Communist system of central planning” and the end of the Transition a “market capitalist system”. Nevertheless there are too many suspiciously absent unknowns and parameters in this transit.

If we made the simple exercise to introduce the most significant parameters and to incorporate certain marginalized unknowns, the new resulting equation will be more explanatory and fited to the facts.

Two different equations to interpret events of enormous importance for the present and the future of the humanity.

Which was the departure situation in Russia?

At the end of 1ªGM, a revolutionary socialist revolution of workers, soldiers and farmers took place when they tried to shake themselves simultaneously of the feudal yoke and the capitalist yoke. The revolution finished being choked and repressed by a Bolshevik party who had a plan to remove the country’s delay and to turn it into a capitalist power able to compete with the imperialistic ones of the time.

The plan was to burn stages by means of a revolutionary alternative mechanism of capitalist economic development able to establish a particular kind of development roadmap outside the reach of the imperialistic countries.

The mechanism consisted in leveraging the economic development, putting into play on one hand the Marxist analytical arsenal to accelerate the development of the productive forces, and on the other, the ideological revolutionary Socialist rhetorical arsenal (transmuted conveniently into terrorism) to stimulate the working-class productivity.

The goal was not to compete "with" the capitalist system. They never tried to create an alternative socialist system to Capitalism but to catch up the developed Capitalism by means of the dictatorship of the new “Soviet” bourgeoisie, the state centralization, the economic planning and the ideological indoctrination to tame, subjugate and explode the working class.

Which was the departure situation in China?

In the Chinese case 2ªGM offered an opportunity to the Chinese people to shake off the feudal regime, but mainly, unlike Russia, to get rid of an imperialistic domination that had divided the country like a pie.

In China the socialist revolutionary movement was much more prolonged and much more extensive (the Jiangxi 1930-33 Soviet, the long march 1933-35,…) that in the Soviet case. The fast subjugation of the peasantry and the Russian working opposition by means of terror and the Stalinist Gulag did not had its equivalent one in China.

As in Russia, “a communist” bourgeoisie began to take form in the PCC after the definitive defeat of Chiang Kai Chek in 1949. But the spread of the farmer rebellion and the depth that the Chinese revolutionary movement had reached represented a serious obstacle for their definitive scaling to power. Whereas in Russia where the opposition was totally neutralized the last years of the 1920s (and eliminated definitively with the purges of the 1930s), in China a revolutionary socialist opposition (ambiguous and often contradictory) would resist until the death of Mao in 1976.

What was the economic situation in the starting line?

At first Russian situation was much better than China’s. Russia was a much more developed and urbanized country than China. The Russian PNB per capita was $3,783 (the Chinese PNB per capita was $285). Industrial employment represented 39% (Chinese 13.5%). The illiteracy (2%) had almost disappeared in Russia (Chinese 44%). 91% of the Russian population had secondary education (Chinese 63%) and 50% were college students (Chinese 2%).

Nevertheless China did not undergo serious macroeconomic imbalances (low inflation, budgetary balance, balanced foreign trade balance, little external debt) in the beginning of its Transition in 1978, the countries of the Soviet Block suffered of a remarkable uncontrol in its macromagnitudes when they were arranged to initiate hers at the end of 1980s.

Unlike the USSR and its satellites, the state central plan in China controlled little more than half of the industrial production. A considerable part of production was decentralized into the hands of the local administrations. In addition the relative number of small and medium companies was proportionally much greater than in the USSR. Mao Tse Dong had managed a certain enterprise decentralization in favour of provinces and cities during the Great Jump Ahead (1957-58) and the Cultural Revolution (1966-76). China, in addition, could count on an extensive emigrated bourgeoisie (overseas Chinese where 55 million with middle trillion dollars in assets) prepared to invest in the country as soon as the conditions would permit it.

Which were the reasons for the Transition in Russia?

The wearing and backward development mechanism with respect aggressive Global Capitalism. After Stalin’s death of and the denunciation of the totalitarian terrorism of the deceased, “the Soviet” bourgeoisie began to lose points in its fight against the working class. Exploitation rate diminished and the working class obtained remarkable improvements in its situation (Soviet well-being state). Productivity decreased and Russia began to lose positions in the capitalist race.

In front of this situation of increasing capitalist deterioration, “the Soviet” bourgeoisie chose to introduce market mechanisms to subject the working class, to increase its productivity and to boost the exploitation rate level.

In 1987, when Perestroika began, “the Soviet” bourgeoisie had been almost 70 years in power. Three generations in power meant a high degree of confidence in itself for “controlling” the transition.

The objective of the Perestroika was to modernize “Soviet” capital to make it competitive on global scale. With the reforms the “Soviet” bourgeoisie expected to reach an situation similar to the globalized capitalist bourgeoisie.

Which were the reasons for the Transition in China?

In 1978, when Deng Xiaoping initiated the way to the reforms, “the communist” bourgeoisie had been able only two years ago to consolidate itself in power after the strong blow of the Cultural Revolution.

In the case of Chinese “the communist” bourgeoisie, the immediate objective of the transition was to assure its positions and privileges recently threatened by the opposition left.

Which was the cause of the gradualism in China reforms?

Fear after Cultural Revolution had sharpened the sense of calculation of the timid and scary Chinese “communist” bourgeoisie. Hence the “gradualism”, the experimentation and sectorialisation of the reforms in spite of the critic advice and recommendations (shock treatments) of the impatient economists and neoliberal agencies. The threat of the left opposition continued being considerable and it was precise to be able to create increasing bases of support between the population.

Deng introduced reforms with extreme caution. He did match the beginning of the reforms with encreases in the prices of the obligatory deliveries of the farmers and elevations of wages of the public companies employees.

The first reforms took place in the farmer sector. The decollectivisation represented the starting gun of the “capitalist modernization” of the country. The reform obeyed to a double strategy: to divide farmers and workers on the one hand and to smooth the footpath for the justification of the reintroduction of the bourgeois values and ideology.

Which was the cause of the lack of gradualism in the Soviet Union?

When Mikhail Gorbachev arrived at the position of General Secretary of the party in March of 1985 he perfectly knew the initiated reforms in China. Contrary to the conventional narrative, its plan of pro-market reforms for the Soviet Union (Perestroika) was, like in the case of China, a gradualist one. Initially it proposed to yield individual lots of earth to the farmers families, to establish special zones of free commerce, to promote small businesses in cooperative regime and of establishing joint ventures with foreign companies.

Nevertheless, soon after beginning the Perestroika, spontaneous mobilizations of great amplitude, demanding more rights, more well-being and more democracy, exploded everywhere..

Before so disjunctive, and in agreement with most of the imperialistic strategists, “the Soviet” bureaucracy parked gradualism in favor of “shock therapy”, that is to say, a infernal succession of reforms that, since it has investigated by Naomi Klein, has the evident advantage for the capital to stun in such a way its victims that they are unable to react at all.

The increasing macroeconomic imbalances accumulated during the past few years, the self-confidence of the old Soviet bourgeoisie in their supposed capacity for “controlling” the transition process, and, by all means, high doses of greed and scorn for their fellow citizens, facilitated the change of strategy. Perestroika and Glasnost were buried. The Big Bang desired by transnational monopolist Capitalism became reality.

In a few years, the great multinational corporations looked themselves already taking possession of the enormous resources of the Euro Asiatic territory, and taking control of a new 200 million consumers market.

Which was the degree of spontaneity in both cases?

According to some western sources (Hoover Institution), “the PCC simply reacted (and wisely was not against) in front the spontaneous initiatives of reform that emanated mainly from the rural population”.

Whereas the Chinese transition would have been generated from a procapitalist spontaneous mobilization of the Chinese peaple (bottom up), hence its “success”, the Russian transition, on the contrary, would have been the result of reforms organized by the Soviet bureaucracy (top down); hence its ”failure”.

The myth of a supposed “spontaneous” descolectivización on the part of the farmer masses at the beginning of 1980s, that the PCC leaders would have finally sanctioned as a fait accompli, myth cultivated by some western means of disinformation and never denied officially by the Chinese bureaucracy, was called into question according to the own documentation of the PCC that has confirmed the existence of strong resistance of all types and at all the levels opposed to the descolectivización organized and directed by the high spheres of the party (top down). Therefore in China there were never spontaneous pro-capitalists mobilizations.

In the old USSR, on the contrary, during the transition, the spontaneity (bureaucratic anti-Capitalism) of the popular masses played a key role (bottom up) in the fast change of strategy conducted by “the Soviet” bureaucracy in favor of the shock treatments and the rapid burial of Perestroika and Glasnots.

What were the imperialist objectives across the equation?

The other side of the equation was not, as would be a simplistic approach, an idealized capitalism, a benefactor, efficient, liberal and democratic capitalism, but an aggressive, a-democratic and unscrupulous globalized monopolist one who was ready to seize an unexpected windfall, an opportunity of primitive accumulation to dismember and eat its unsuspecting prey.

In the Soviet case the coveted target (the entire Soviet Bloc) was a virgin market of about 200 million, a highly skilled work force to exploit, and above all, an immense amount of natural resources that had previously been out of the reach of the great monopolist TNCs.

But for the transnational monopoly capital the conquest of China was a key strategic value. In a time when new technologies and financialization extremely facilitated offshoring and outsourcing, a huge abundance of work force capable of being subjected to high rates of flexi-exploitation by a collaborative CPC and a vast territory to degrade and pollute without measure or compassion, with de collaborative help of the corrupt CPC, where the final cards needed for total globalization. Having consolidated their positions, the goal of the Chinese domestic market would fall like ripe fruit.

What were the "recommendations" proposed by the imperialists?

Initially, from its various forums, the imperialists proposed identical shock therapy for both countries.

However, when started to become evident the unexpected wild results of shock therapy in the USSR and some of its former satellites (The Chinese per capita GDP increased at a rate of 8% per annum between 1978 and 2000 while the Russian GDP fell by 64% between 1990 and 2000), and as a result of the chaos caused, the coveted possession and control of the immense natural resources of the area had ended up in the hands of a mafia-nationalist oligarchy slightly inclined to give them up to the transnational monopoly capitalism, the most prestigious analysts began to recognize that often greed breaks the sack.

Chinese gradualist option, however, resulted in the end, the best option for the interests of transnational monopoly capital. Land reform certainly did nothing to improve productivity, but increasing rural poverty transformed the Chinese countryside in an almost inexhaustible supply of labor classless and flexible workforce (about 100 million illegal immigrants in their own country), that in addition be able of very high levels of exploitation, burst massively into the Chinese labor market allowing to dismantle the possible resistance of the rest of Chinese workers.

Unlike the Soviet Union and its former satellites in China markets where liberalized prior to mass privatization. This would allow public companies to adapt to new conditions without suddenly cut off the umbilical cord of public aid. The aim, in principle, would be to give them time to become the new champions of the new Chinese monopoly capitalism.

However, the prudent gradualism did not prevent the progressive loss of control by the Chinese bourgeoisie. Gradually, the interests of large transnational groups were imposed in almost all sectors. China's entry into the WTO meant the final victory of global monopoly capital. History had reserved the CPC and the rest of the "Communist" Chinese capitalism the lackluster task, initiated by the pre-revolutionary comprador bourgeoisie, to undersell China, in full, to foreign imperialism.

Epilogue of the "spontaneous" land de-collectivization: planned expulsion of 300 million peasants from their land

Once the capitalist reforms in the industrial sector secured, small family farms created in the early 1980s are now, according to the Chinese leaders, "unproductive" and will have to be dismantled to concentrate again to become efficient for powerful Chinese and international agribusiness (globalized agricultural collectivization)

Although numerous, farmers no longer have the support of urban workers (rural migrant workers have contributed to dynamite their wages and working conditions). The bureaucracy and monopoly capital, if no one prevents, are planning to expel from their land as many as 300 million peasants "redundant".

In 2008, the CPC Central Committee urged farmers to trade their rights over their land to favor the formation of more efficient scale large farms. In October 2013, the Research and Development Center, the largest government think-tank of the nation, proposed for the 18 central committee of the party (November), allowing farmers to sell, lease or transfer their land. He also proposed that the government should establish a unified land market across the country. The Stock Exchange of Beijing reacted with sharp increases in agricultural business with such prospects. Spontaneity, again, would shine by their absence.

In conclusion

Bruce P. Jackson (Hoover.org): “The Post-Soviet Russia is a primitive form of mercantile capitalism and Putin is the architect of the system of state-oligarchic capitalism unique to Russia.”

In Russia, a type of capitalism transited to another type of capitalism. The actual result was not what was expected by monopoly capital and therefore was a "failure." The "Soviet" bourgeoisie ended converted into a nationalist oligarchic mafia bourgeoisie that has so far prevented the control of natural resources in the area by the large transnational monopoly groups.

In China reforms where initiated to strengthen and consolidate the positions of the bureaucracy threatened by the socialist opposition. However, the transition has finished giving up China to major transnational monopoly groups (and therefore has been a "success" story), making the "communist” Chinese bourgeoisie into a replica of the comprador bourgeoisie previous to the revolution.

More information: The Political Economy of Decollectivization in China
Minqi Li: The Rise of the Working Class and the Future of the Chinese Revolution
Fred Engst: Rise Of China


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