Louis Proyect: The Unrepentant Marxist

August 25, 2019

Sidney Rittenberg (1921-2019): a long-time and remarkable member of the CP in China

Filed under: China,Maoism,obituary — louisproyect @ 6:56 pm

Today, the NY Times has an obituary for Rittenberg that is included below so that you won’t have any problems getting past the paper’s paywall. I first became aware of him in 2013 when I reviewed a documentary about him titled “The Revolutionary”. Since the review covered another film as well, I am only reprinting the section that dealt with him. Fortunately, the film can be seen on both Amazon Prime for free if you are a member or on YouTube for only $2.99. The link is above.

From my review:

Sidney Rittenberg is the quintessential anti-Zelig. Like Woody Allen’s character, he shows up in key moments of Chinese history next to all the big-time players but unlike Zelig is in a commanding position, most of all in the Cultural Revolution.

He was born to a wealthy Jewish family in Charleston, South Carolina in 1921 and became involved with the labor movement while at the University of North Carolina, a long-time hotbed of the radical movement not unlike CCNY. Another famous red alumnus was the late Junius Scales, another scion of an upper-class family.

When he was in the army, he got sent to language school to learn Chinese. Afterwards he was sent to China just as the war was ending. With his radical sympathies, he was inspired to seek out Mao Zedong who was organizing his Red Army in Yan’an province for an all-out assault on the KMT army.

Upon meeting the 24-year-old Rittenberg, Mao invited him to take a senior position at Radio Peking, making sure that the CP’s communications with the West were conveyed properly in English. Rittenberg agreed to stay on but only on one condition—that he be accepted as a member of the Communist Party. That turned out to be a double-edged sword since this experience brought him terrible misery even as it offered him the most fulfilling moments of his life. Even though I and most of my veteran radical readers never reached such a lofty status, we surely can identify with him as he relates his being ground down as a member of what amounted to the largest socialist cult in history—Mao’s Communist Party.

Just four years after going to work at Radio Peking at a salary larger than Mao’s, Stalin sent Mao a letter accusing Rittenberg of being a spy. Rittenberg was offered the choice of being sent back to the U.S. immediately or going to prison in China. He chose China and then spent 6 years in solitary confinement until the Chinese brass decided he wasn’t a spy after all.

Oddly enough, the only other people besides Stalin who raise the possibility that Rittenberg was a spook was the Financial Times:

A feeling that Rittenberg must, surely, have been a deep-cover CIA agent still surfaces occasionally in the US. “There were actually no western agents in China in my time,” he says. “But former intelligence people are convinced to this day that I was an agent under deep cover. I get asked quite probing questions even today by retired CIA people. When I deny it, they say, ‘Wow, you’re good.’ I always considered myself a representative of the genuine American people, in the tradition of revolutionaries like Tom Paine. That’s why I always dressed as an American. I wanted to be an American friend of China, not Chinese.”

I find the CIA accusation hard to believe. Why would an asset such as Rittenberg be ordered to spend 6 years in a Chinese prison when his talents could have been deployed elsewhere? I think it is much more plausible that he did everything he did out of a conviction that he was a participant in the 20th century’s greatest anti-imperialist revolution. I did many stupid and self-destructive things for a much more marginal movement.

Rittenberg is still alive, having moved to the U.S. after his second imprisonment, this time during the Cultural Revolution and once again for being a foreign spy. Now in his 90s, he is an amazingly articulate man capable of deep insights about the Chinese revolution and the personal disasters stemming from both his idealism and the ambitions many of China’s top politicos harbored and still do.

August 7, 2019

One Child Nation

Filed under: China,science — louisproyect @ 9:10 pm

Nanfu Wang, the Chinese émigré who made “Hooligan Sparrow” and “I Am Another You”—two outstanding documentaries, has a new film opening on Friday at the IFC Center in New York. Titled “One Child Nation”, it examines the draconian law that put a ceiling on births in China from 1979–2015. She was born in this period but her parents also were allowed to have a second child, her younger brother, because they were rural villagers. Now that she has become a mother of a young son herself, she was inspired to visit China and interview her parents, their neighbors, and urban dwellers to see how the policy impacted them.

Wang’s films tackle wrenching human drama. The 2016 “Hooligan Sparrow” is about a struggle to bring an elementary school principal to justice after he raped six girls. Known as the Hooligan Sparrow, Ye Haiyan is a leader of what amounted to China’s #MeToo movement. Unlike the USA, she and her team are considered enemies of the state and constantly harassed. So was Wang’s film team that employ various ruses to cover the struggle, eventually smuggling the raw footage out the country. A year later, she made “I Am Another You” that was even more daring. Determined to find out why a young man about the same age as her chose homelessness and a nomadic life as a beggar in the USA, she followed him about with her camera, living under the same circumstances. Both films are available as VOD, including YouTube, and well worth renting for a pittance.

“One Child Nation” reveals a population that is decidedly ambivalent about the policy, including her mother. Like most Chinese, she accepted it as a necessary evil. Given the massive propaganda campaign by the state, which included folk operas and the like, there was not even the hint of an alternative.

Wang has managed to obtain photos of the human wreckage the policy left behind, including gruesome evidence of how an extra newborn was often left in a garbage dump. As China had already been making huge strides toward private property under Deng Xiaoping, many infants were rescued and turned over to orphanages that marketed them to American families. Among them was American-born husband Brian Stuy and his Chinese-American wife Long Lan Stuy, who adopted three Chinese daughters. After learning about the circumstances of their availability, they became inspired to found Research China, an organization to help parents trace their adopted children’s history and even reunite siblings. Ironically, there is not much interest in being reunited, especially those who grew up in the USA.

After seeing the film, the publicist asked for my reaction. I wrote her back: “The film might have provided more background on how China ended up with such a policy but it was a valuable documentary. Will post a review just before it opens. I’ll probably add that background in my review.”

Here’s that background now.

Probably the most authoritative study of the policy was the 2008 “Just One Child: Science and Policy in Deng’s China” by Susan Greenhalgh. I really didn’t have time to read the book but the 36-page article “Science, Modernity, and the Making of China’s One-Child Policy” she wrote for the Population and Development Review in June, 2003 is a good place to start.

The article is heavily influenced by Foucault but there is enough substance to help you get a handle on the political and historical context. As the title implies, some of China’s top scientists helped to formulate the policy based on economics and demographical data. Drawing upon 15 years worth of interviews, Greenhalgh concludes that population science is intimately connected to politics, something that should be obvious to anybody familiar with Thomas Kuhn’s writings.

Greenhalgh writes:

I will argue that at the heart of China’s post-1979 population policy lie two powerful notions: that China faced a population crisis that was sabotaging the nation’s modernization, and that the one-child policy was the only solution to it. In China for most of the past 20-plus years, these ideas have had the status of self-evident truth. I question those apparent truths by looking at how they were constructed. I show that these ideas about China’s population problem and its ideal solution were actively fabricated by Chinese population scientists, using numbers, numerical pictures (such as tables and graphs), and numerical techniques (such as projections) to tell a particular story about China. In contrast to the coercion account, which points the finger at “communist coercion,” this close look at the actual making of the policy reveals instead that practically all the key ideas on which China’s one-child policy was based were borrowed from the West, and from Western science at that.

Specifically, the Western science was an update of Malthus, as indicated in this telling passage:

Innocuous and even progressive though it must have seemed in 1979, the intervention of the natural scientists in the conversations about population produced revolutionary effects. In a short time, a Marxian theoretical field belonging to the social sciences had been reinvented as a scientific-that is quantitative-discipline. The mathematical science of population that was to revolutionize China’s population thought and practice was an unusual amalgam of cybernetics, control theory, systems engineering, and Club of Rome-style limits-to-growth thinking that had been popular among some Western academics and a sizable chunk of the general public in the West in the early to mid-1970s (especially Meadows et al. 1974; Mesarovic and Pestel 1974; on the work’s public appeal, Wilmoth and Ball 1992). The group’s leader, Song Jian, got the idea for this project on a delegation visit to Europe in 1978. Song’s description of his encounters with some work inspired by the Club of Rome brings out the excitement his discovery produced. This passage also provides a backward glimpse at the larger intellectual climate of the 1970s, when notions of explosions of population growth were prevalent around the world and applications of control theory to abstract economies facing such situations were standard fare in Western population economics:

After more than ten years’ isolation from the outside world, during a visit to Europe in 1978, I happened to learn about the application of systems analysis theory by European scientists to the study of population problems with a great success. For instance, in a “Blueprint for Survival” published in 1972, British scientists contended that Britain’s population of 56 million had greatly exceeded the sustaining capacity of ecosystem of the Kingdom. They argued Britain’s population should be gradually reduced to 30 million, namely, a reduction by nearly 50 percent…. I was extremely excited about these documents and determined to try the method of demography. (Song 1986: 2-3)

It should be added that Greenhalgh does not deny that China had serious issues of bringing economic production and population into balance but that the leading scientists exaggerated them under the influence of Western neo-Malthusians. Essentially, the scientists based the need for such a policy through a comparison of leading economic and demographic indicators that grouped China with advanced industrial economies rather than 3rd World countries. Given such a skewed comparison, it was inevitable that a destructive one-child-only policy would ensue.

(Contact me privately at lnp3@panix.com for a copy of Greenhalgh’s article)

March 1, 2019

China, Saudi Arabia and the Fate of the Uyghurs

Filed under: China,Counterpunch,Saudi Arabia,Uyghur — louisproyect @ 3:18 pm

COUNTERPUNCH, MARCH 1, 2019

Beginning with the 9/11 attacks, much of the left decided that Saudi Arabia was the chief engineer of a Wahhabi plot to impose its reactionary, feudal, and patriarchal values on the rest of the world. Supposedly, the USA was being punished for its licentious and ungodly ways even if it was one of Saudi Arabia’s chief supporters in the Middle East, alongside Israel. While 9/11 Trutherism is hardly worth taking seriously, another line of investigation has implicated the Saudi state as providing the logistical support that made the attack possible while the USA looked the other way. The truthers claim that the FBI and CIA ignored the threat because they were in cahoots with al-Qaeda. What could American imperialism have possibly gained by such an attack? The answer is an excuse to invade Iraq, a ridiculous idea. But is it any more ridiculous to believe that Wahhabism, the official religion of Saudi Arabia, explains the attack or Saudi foreign policy in general?

If you are looking for grounds for this, the 9/11 Commission Report  is a good place to start. It does not blame the Saudi state but its evil spawn al-Qaeda. The report stated:

In the 1980s, awash in sudden oil wealth, Saudi Arabia competed with Shia Iran to promote its Sunni fundamentalist interpretation of Islam, Wahhabism. The Saudi government, always conscious of its duties as the custodian of Islam’s holiest places, joined with wealthy Arabs from the Kingdom and other states bordering the Persian Gulf in donating money to build mosques and religious schools that could preach and teach their interpretation of Islamic doctrine.

For those who viewed Saudi Arabia as so devoted to ascetic values that it would be willing to mount a devastating attack on the WTC, a symbol of the financial system it was closely tied to, and the Pentagon, its chief military benefactor, there were some counter-indicators best left under the rug. For someone like Prince Bandar bin Sultan Al Saud, the former Saudi ambassador in Washington, who was supposedly the quartermaster supplying the jihadi hijackers, those values were not to be taken too seriously as Christopher Dickey reported in The Daily Beast: “When the prince was the ambassador he was the toast of Washington, and plenty of toasts there were. Bandar bin Sultan smoked fine cigars and drank finer Cognac.”

Continue reading

January 20, 2019

Is China a model for a New Green Deal?

Filed under: China,Ecology — louisproyect @ 10:39 pm

On January 14th, Dean Baker wrote an article for Truthout titled “The Green New Deal Is Happening in China” that poses important questions for the left. Since the article is focused exclusively on reducing greenhouse gases to the exclusion of any other “green” problem areas, can we assume that climate change is the be-all and end-all of the environmentalist left? It also leads to the broader question of China’s relevance to the left. If it is in the vanguard of the fight against climate change, then can we conclude that Xi Jinping might be legitimately described as socialist? As the American democratic socialist left has committed considerable energy behind the call for a Green New Deal, can we look at the Communist Party in China as an ally of the left?

For some, the efforts mounted by the Chinese government are indications that it does have progressive aspects. For example, MRZine, the online voice of Monthly Review, posted a piece last May titled “China’s determined march towards the ecological civilization” that was written by Andre Vltchek, the erstwhile Counterpunch contributor who is well-known for his belief in the merits of the BRICS. (Whether Brazil is still considered an asset is open to question. The entire left views Bolsinaro as either a fascist or a rightwing goon, even though China has no plans to stop doing business with him and vice versa.)

Vltchek sought out a nonagenarian named John Cobb Jr., whose admiration for the Chinese governments past and present is unbounded. He told Vltchek:

The talk of moving toward an ecological civilization also encouraged reflection about “civilization” alongside “market.” That supported those Chinese who were concerned that the narrow concern for wealth at all costs was not healthy for human society. Marxism had always emphasized economic matters, but it was concerned to move society away from competition toward cooperation. It was always concerned with the distribution of goods, so that the poor would be benefited, and workers would be empowered. The idea of recovering traditional Chinese civilizational values gained in acceptance.

While Dean Baker’s article is far more measured, he does offer this:

Over the last decade, China’s GDP growth has averaged 7.9 percent annually. Perhaps there is a story where China’s economy would have grown even more rapidly without the subsidies and other measures to promote green growth, but obviously, these measures could not have been very serious impediments if the country could still sustain one of the fastest growth stretches the world has ever seen.

One cannot be sure if Baker identifies “green growth” as synonymous with reducing greenhouse gases but if so he is sadly mistaken. Even if alternative energy sources constituted 90 percent of the country’s supply, it would still be a ticking time-bomb as far as the environmental crisis is concerned. Let me review some of the key problem areas.

Water

China’s environmental crisis is deepest when it comes to water along a number of fronts. In 2008, Scientific American—not a Trotskyite journal, the last time I noticed—published a piece titled “China’s Three Gorges Dam: An Environmental Catastrophe?” that reported on problems so deep that even government officials could not sweep them under the rug. They included the likelihood of “triggering landslides, altering entire ecosystems and causing other serious environmental problems—and, by extension, endangering the millions who live in its shadow”, according to Scientific American. In a country where biodiversity is sacrificed to “socialist development”, the dam has proven deeply destructive. The Three Gorges area alone accounts for 20 percent of Chinese seed plants—more than 6,000 species. As the dam floods one area while rending others arid, that biodiversity ends up on the chopping block. By the same token, the dammed Yangtze River is host to 177 unique fish species, all of which have been subject to conditions that might cause extinction. Read the entire Scientific American article to get an idea of how far China is from an “ecological civilization”.

Moving right along, China suffers enormous water pollution due to unregulated manufacturing. Greenpeace published a report in June 2017 revealing that 85% of the water in Shanghai was undrinkable and that 56.4% was unfit for any purpose. One of the polluters was Luliang Chemical Industry that dumped 5,000 tons of chemical waste next to a river used as a drinking water source. China has targeted companies like Luliang through a new taxation policy that bases a fee on the amount of pollution being produced. A more “socialist” policy would be to begin jailing the polluters but I wouldn’t count on it. Taili Ni, a doctoral student, wrote a paper titled “China’s ineffective water pollution policy: an issue of enforcement” that strengthens my doubts. China’s water protection laws are among the strongest in the world, but there is a gap between the letter of the law and how it is enforced. Ni calls this the “enforcement gap”.

Environmental protection and enforcement of environmental policies rely on local governments to be successful. However, political corruption is a very present factor at the local level, and greatly interferes with enforcement. Local governments tend to have slightly different goals and motivations than the central government, and the system of fragmented authoritarianism allows them to act according to these motivations. Economic growth is crucial at the local level too, and in many cases local officials face high incentives to report economic success. There is a close link between local governments and polluting enterprises; in fact, local governments are often major shareholders of these enterprises, creating a common conflict of interest.

If you consider her words carefully, you will be reminded of how things work not only in China but in all countries where “economic growth” is in the driver’s seat. The USSR was a disaster area environmentally because decisions were made on generating income for the Stalinist state. For example, it was cotton production that turned the Aral Sea into a dead zone. In China, you get the same habits that were deeply engrained in Maoist time but magnified by the country’s integration into global markets. If 1.5 million people have died as a result of pollution in China, that can be rationalized by party theoreticians as the costs of building an industrial society that can meet the needs of the people. Is there much difference between this idea and Walt Rostow’s development theories? If so, I can’t detect it.

Soil

I can’t help but wonder how Xi Jinping gets a free pass in Monthly Review when his government is carrying out policies deeply at odds with John Bellamy Foster’s analysis of the “metabolic rift”.

Unlike the United States, China’s farms are smaller and less mechanized but that has not prevented them from using chemicals indiscriminately. To give you an idea of the dimension of the problem, China uses more than 30 per cent of fertilizers and pesticides sold globally (it is first in the world) but on only 9 per cent of the world’s soil. When fertilizers seep into rivers and lakes, it fosters the growth of algae that is inimical to marine life—a process called eutrophication. It has led to Chinese leisure-seekers trying to enjoy its algae-ridden lakes as the Guardian reported last year as best they can.  Here are people trying to make the best of a sorry situation at a lake overrun by algae:

China has made an effort to convince farmers to reduce their chemical fertilizer input with some success but it still does not resolve the “metabolic rift” that John Bellamy Foster has written about so persuasively. To do that effectively, it would require overcoming the breach between city and countryside as articulated in the Communist Manifesto but that is not very feasible given China’s integration into world markets. Like all capitalist countries, the cities have emerged over a century as production and export centers. To restructure China is a Herculean task even if it is a necessary one. Missing from the calculations of Alexandria Ocasio-Cortez’s endorsement of a Green New Deal and Dean Baker’s salute to China for carrying one out is a recognition that capitalism is unsustainable. Period.

Air

Largely as a result of wide-spread dissatisfaction with the toxic air pollution in most cities, the government cracked down in 2017 making even Greenpeace impressed with the results.

But under Donald Trump’s assault on its chief economic rival, the Chinese capitalists and the “Communist” state that rules on their behalf have been forced to retreat in order to allow firms to maintain a certain level of profitability.

Last September the Ministry of Ecology and Environment removed blanket bans on heavy industry production. Monitoring was decentralized, with local governments allowed to set their own targets. As is the case across the board, economic and environmental needs clash with each other. Despite Baker’s reference to “green growth”, the reality in China is that you have green versus growth. If the world was organized on the basis of human need rather than private profit, this would not be such a big problem. However, that would require a worldwide socialist revolution that most on the left view as a hopeless project. I guess I’ll stick to that even if I am a minority of one. That’s why I call myself Unrepentant.

Externalities

Finally, there is a failure on the part of Dean Baker and Andre Vltchek to acknowledge the environmental impact that China has on the countries it has established trade relations with. Was trade relations a euphemism? Sorry. I meant to say colonized.

If China has eased up on coal production internally, that hasn’t prevented it from profiting from it elsewhere. It is not that different from England turning to the New World in search of timber after it had cleared its own forests in the 18th century.

Kenya has been one of the beneficiaries of this colonialism. A consortium of Kenyan and Chinese energy firms are building a coal plant on the only part that is untouched by industrial development. Scientists and economists worry that this will become the largest source of air pollution in the country. Naturally, the bituminous coal that will be fed into this plant will be imported from South Africa, one that releases large amounts of toxins, particularly if improperly burned. Does anybody believe that China, Kenya or South Africa care much about this?

Finally, there is the matter of China’s ties to Brazil, its number one trading partner. Despite Bolsonaro’s invective against China during his campaign, there are signs that nothing much will change. Li Yang, China’s Consul General in Rio de Janeiro, said, “Personally, I don’t believe there would be a radical change from the new federal government towards China. I don’t believe so. So, either economic or political ties between the two parts, both Brazil and China, will be further tightened. We firmly believe so.” So, you can expect China to benefit from the soybeans being produced in the Amazon rainforest after all the trees have been cut down and the native peoples driven out or killed.

What if Bolsonaro carries out a Pinochet-type coup? Would that make China willing to break trade relations with an anti-working class dictatorship? Given China’s history under the Communist Party, I rather doubt that especially what happened under Pinochet and a China that was arguably still socialist.

In 1973, after General Pinochet overthrew Allende in Chile, the Chinese Embassy would not provide refuge to leftists fleeing terror. Just two years later, China offered Pinochet a $50 million loan, even when European governments would not extend a penny.

Things kept on this way for decades. In 1998, Jon Lee Anderson told New Yorker readers about the red carpet treatment the murderer received in China when Jiang Zemin was president:

Curiously, Pinochet’s popularity extends to the People’s Republic of China, which he has visited twice. China is a major client for Chile’s copper exports, and Pinochet has nurtured his relationship with Beijing. “They are very fond of me,” he says. “Because I saw that Chinese Communism was patriotic Communism, not the Communism of Mao. I opened up the doors to Chinese commerce, letting them hold an exposition here, in which they brought everything they had—and they sold everything they brought.” On both his trips to China, Pinochet says, the Chinese treated him with great respect. “The first time they put me in a house, but the last time it was a palace. And I became good friends with General Chen, a warrior who fought in Korea, in Vietnam, and who doesn’t like the Americans very much.” Pinochet shot me a sidelong glance and grinned.

July 8, 2018

Rhino horn poaching: brought to you by the BRICS

Filed under: animal rights,China,South Africa — louisproyect @ 7:44 pm

Three days ago a NY Post article titled “Lions fatally maul poachers who broke into reserve to hunt rhinos” got shared widely on Facebook, including by me. For obvious reasons, this was a story that made you feel that some kind of animal revolt was taking place a la Planet of the Apes.

What you don’t get from Murdoch’s tabloid is any sense of the complexity that lay beneath the surface of this incident. For that you had to go to the NY Times, a newspaper that many radicals despise because it is for big business, etc., ad nauseam. However, as true as that may be, there is no substitute for the kind of newspaper that Karl Marx used to read in gathering the facts. For him, it was the London Times. For us it is the NY Times.

Titled “Lions Eat Men Suspected of Poaching Rhinos. Some Saw ‘Karma.’”, the Gray Lady coverage identified the socio-economic circumstances that led to the poaching epidemic:

Rhino horn is worth about $9,000 per pound in Asia, driving a lucrative and illicit trade. It is a prized ingredient in Chinese traditional medicine and is considered a status symbol.

South Africa is home to about 20,000 wild rhinos, more than 80 percent of the world’s population. About one-third of the animals are owned by private breeders. Since 2008, more than 7,000 rhinos have been hunted illegally, with 1,028 killed in 2017, according to the South African Department of Environmental Affairs.

“Selling a single horn can exceed the yearly income of most rural people,” Dr. Hübschle said.

The Eastern Cape is South Africa’s poorest province, with a gross domestic product of less than $3,700 per capita. The unemployment rate here, including people who have given up looking for work, exceeds 45 percent, significantly higher than the national average.

“Behind poaching there’s a bigger story of structural inequality,” Dr. Hübschle said. “People were chased off their land during colonialism and apartheid, losing their customary hunting rights and tenure. Today, many local communities experience some trickle-down from poaching, while attitudes are generally negative towards private game owners and protected areas.”

Anybody who has been following this story, as I have mostly as a result of seeing a number of films about poaching over the years, you’re probably aware that the Chinese see rhino tusks as a magic elixir that can cure cancer, impotence, etc. China has also been a major black market for elephant tusks that are used to carve expensive trinkets that the bourgeoisie likes to display as a symbol of having made it. For all of the lip-service paid to Maoism in this fucked up country, there seems to be little progress made in either scientific understanding of medicine or aesthetics. Superstition and ostentation rule.

However, even with a ban on both commodities, the demand continues. For rhino tusks, there is a logic that is reminiscent of the subprime mortgage boom of the period prior to the stock market crash of 2007. They have become for investors the equivalent of the tulip mania of early 17th century Holland.

Takepart, an online magazine associated with Participant Media that produced the documentary on Edward Snowden, lays it all out:

But a new paper in the journal Biological Conservation raises a startling alternative theory. Rhinos are dying by the hundreds for what may be in essence an investment bubble, like tulips in 17th-century Holland or real estate in 1920s Florida.

It’s part of a trend over the past decade in China, according to Yufang Gao and his coauthors, of treating art and antiquities as a place for investors “to store value, to hedge inflation, and to diversify portfolio allocation.” Rhino horn assets typically take the form of cups, bowls, hairpins, thumb rings, and other ornamental items.

“Rhino horn pieces are portrayed in the Chinese media,” Gao and his coauthors write, “as an excellent investment opportunity whose value is tied more to the rarity of the raw materials rather than the artistic nature of the item. The aggressive media attention has played a significant role in the growth of the art market.” Press reporting about outlier items—those sold for astronomically high prices—“drives the perception that collecting rhino horn is highly profitable and influences black market prices.”

So you might think that this kind of speculation represents a combination of medieval backwardness and the frenzied search for fast bucks in today’s China. However, the real origins of this sick exploitation of animals at the top of the food chain is in Mao Zedong Thought. Although folk medicine has been around for thousands of years in China, it was Mao’s state-based elevation of the practice that led to the poaching epidemic. In the 1950s, facing a shortage of trained doctors in China, Mao ordered the creation of a directory of all these snake oil medications to make up for the deficit even though he thought it was bogus. In other words, Mao had no problems with people eating powdered rhino tusk for their heart problems but you can be damned sure he would get proper, modern medical treatment.

For all of China’s flaws, and they are biblical in proportion, South Africa—a fellow BRICS member—has very few of the institutional advances of China that were part and parcel of the Chinese revolution. While most people, including me, had high hopes that the ANC and the South African Communist Party, would make huge economic changes and even go so far as to advance beyond capitalism, the country is the most unequal in the world with a GINI coefficient of 63.40. (A perfectly equal society would have a GINI coefficient of zero.)

The Eastern Cape in South Africa is a province formed out of the Xhosa homelands of Transkei and Ciskei, two Bantustans—in other words, places where Blacks were forced to live. Under apartheid, these places were allowed to run casinos and topless revue shows that the racist government had banned elsewhere as being immoral. In one such Bantustan – Bophuthatswana in what is now North West Province – Sun City was created as a resort that became the eye of the hurricane in anti-apartheid protests. Like BDS today, many performers crossed the picket line for a lucrative pay check, including Elton John, Rod Stewart and Linda Ronstadt. Leading the boycott attack on Sun City apartheid, Bruce Springsteen’s sideman Steve Van Zandt made a record with artists pledged to shun Sun City and South Africa in general.

So what might you expect if the ANC refused to tackle the deep poverty that apartheid’s worst victims were facing? Poaching, that’s what.

You’d think that the Eastern Cape’s favorite son would have done something to attack the province’s deep-seated economic weaknesses. I speak here of Nelson Mandela who Steve Van Zandt and all these other activists placed their hopes on.

Let me conclude with a long excerpt from a Time Magazine article by Alex Perry titled “The Eastern Cape, Mandela’s Homeland, Still Suffers from Neglect and Misrule” that is a depressing read, especially for someone like me who put considerable time and effort in the early 90s supporting Tecnica’s work in the new South Africa:

When Nelson Mandela’s body is flown to Mthatha in the Eastern Cape Saturday ahead of his burial Sunday in the nearby village of Qunu, he will be returning to his home and to the heartland of his African National Congress (A.N.C.) – and also to one of the most egregious examples of A.N.C. failure in power. Today while cities like Johannesburg and Cape Town enjoy a new cosmopolitanism, a third visit on Wednesday confirmed once again that transformation is far less marked in the Eastern Cape. So do the statistics. A full 88% of people of the province’s population still live below the poverty line, according to government figures, millions of them in the same township shacks and grass-roofed huts that they occupied under apartheid. Government services are dire to non-existent: power, if it exists, can black out for days, while provincial statistics show 78.3% of the population have no running water and 93.3% have no sewers, prompting intermittent outbreaks of cholera. HIV/AIDS rates run at 13%, rising to a third in some townships. Unemployment is officially 41%, though non-governmental studies put it at 70%.

The destitution nurtures an epidemic of violent crime. The South African Police Service says the Eastern Cape has the country’s highest homicide rate and Mthatha’s, at 130 people per 100,000, is three times the provincial rate and one of the highest of anywhere in the world. Most horrifying are the rape statistics. The SA Medical Journal found rape in Mthatha rose from 39 per 100,000 women in 2001 to 417 in 2006. Since studies indicate that at most only 10% of rapes are reported, it concluded a more accurate but still conservative figure was 1,300 per 100,000 a year. That’s 45 times the equivalent figure in the U.S. and makes Mthatha a contender for rape capital of the world. Grimmest of all, children are at particular risk. The study showed 46.3% of the victims were under 16, 22.9% under 11 and 9.4% under six.

Apartheid left an atrocious legacy in the Eastern Cape. South Africa’s white supremacist social engineers divided much of the province into two areas it designated autonomous black homelands, Transkei and Ciskei, which it continued to rule as puppets but cut off from any government spending. The injustice of that racial marginalization fueled a wave righteous rebellion which bore many A.N.C. leaders – Mandela, and also Oliver Tambo, Walter and Albertina Sisulu, Chris Hani, and Govan and Thabo Mbeki, as well as Black Consciousness leader Steve Biko.

Among them was Laura Mpahlwa. Born in Johannesburg in 1929, she was among the first to move to the South Western Township (Soweto) when it was designed a black dormitory town after apartheid was set up in 1948. In the 1940s Mandela moved from Qunu to Johannesburg, then Soweto. Mpahlwa went the other way, going to work in as a nurse in Mthatha hospital in 1953. “Back then, it was mud huts all the way from East London to Durban,” says the 83-year-old, referring to two major coastal cities.

With Transkei’s government little more than an apartheid puppet, the struggle was as fierce in Mthatha as Soweto. Mpahlwa’s first son spent five years on Robben Island for subversion, her second fled into exile and her third was tortured. Mpahlwa herself helped smuggle A.N.C. leaders in and out of South Africa from Transkei.

In 1990, Mandela was freed after 27 years in prison. In 1994, he became South Africa’s first black president. Mthatha was ecstatic. “There was such euphoria,” says Jennie, now 72. “It was such an amazing thing. We felt so hopeful.” There were also some immediate improvements. “People got lights,” says Laura. “Some got water. Work started on roads. There were social grants.” Still, when the A.N.C. asked Mpahlwa to become an MP in the new parliament, she declined. “I was scared,” she says. “Deep down I knew in my heart it was too big a position. I wasn’t trained for it. I wouldn’t cope.”

Other A.N.C. members did not share her modesty, with predictable results. The government of the new, free South Africa still left some of its people short of what they needed – books, teachers, medicine, roads, houses, jobs – and failed to protect many from what they didn’t. “Drugs, high rates of teenage pregnancies and HIV/AIDS,” says Mpahlwa. “There was mismanagement, misuse and, very disappointing, a lot of fraud.”

June 11, 2018

Is China Socialist?

Filed under: China,economics — louisproyect @ 9:04 pm

Donald Trump asking Xi Jinping for Karl Marx reading recommendations, especially anything on “spiritual pursuit”

Four days ago Michael Roberts posted an article titled “China workshop: challenging the misconceptions” that raised a number of interesting questions:

What are the reasons for China’s phenomenal growth in the last 40 years and can it last? What is the nature of the Chinese economy: is it capitalist or not? What explains under Xi the new emphasis on studying Marxism in China’s universities? Is China’s export and investment expansion abroad imperialist or not? How will the trade war between the US and China pan out?

The workshop invited Roberts and a number of Chinese economists to speak on these questions, all of whom—including Roberts—denied that China was capitalist. It was sponsored by the School of Oriental and African Studies at the University of London, universally referred to nowadays as SOAS ostensibly because of the stigma attached to a word like Oriental. In the first session, Professor Dic Lo, an economist at SOAS who was the moving force behind this gathering, spoke alongside one Zhu Andong,  who is the Vice Dean at the School of Marxism at Tsinghua University. School of Marxism? Jeez, if I had kids, that’s where I’d want to them to study.

Or maybe not.

Dic Lo chastised people like Martin Hart-Landsberg, Paul Burkett, David Harvey, and Minqi Li for describing China as “neoliberal capitalist”, where growth is based on the “Foxconn” model—you know, the immense factory that turns out electronic parts and that is so oppressive that there was an epidemic of suicides.

For his part, the Vice Dean of the School of Marxism concurred with Dic Lo and offered supporting evidence for the country’s anticapitalist bona fides–the official support for the study of Marxism in Chinese universities like his. Well, only last month Xi Jinping stated that Marxism is “totally correct” for China so who are we to question that? He told all party members at a big gathering celebrating the 200th anniversary of Marx’s birth to study his writings as a “way of life” and “spiritual pursuit”.

Ironically, the Vice Dean of the School of Marxism had a different take on Minqi Li at one time. In 2005, they co-authored a paper titled “Neoliberalism, Global Imbalances, and Stages of Capitalist Development” that described the U.S. and China as the two main engines of neoliberal growth. Could it be possible that such a paper might have reflected youthful radicalism that has been tamed through the inevitable process of a career path in the Chinese academy, even if the top roosts are emblazoned with the image of Karl Marx?

Dic Lo got in the face of those ultra-leftists like Martin Hart-Landsberg, throwing down the gauntlet:

All the talk from the left, said Lo, was about political repression, labour exploitation, inequality or Chinese ‘imperialism’. But then how to explain China’s phenomenal growth and success in taking over 850m people out of poverty (as defined by the World Bank) and reaching national output second only to the US. China doubles real living standards every 13 years. It now takes the US and Europe 50 years and Japan even longer. Is this just fake or illusory and if not, how can this ‘capitalist’ and ‘imperialist’ economy have bucked the trend, when the record of all other capitalist economies (advanced or ‘emerging’) can show no such success? “How can it be possible, in our times, for a late-developing nation to move up the world political-economic hierarchy to become imperialist? Can anyone on the left answer this question?”

Probably without realizing it, Lo answered his own question by asking us to “explain China’s phenomenal growth and success in taking over 850m people out of poverty.” It should be obvious that this phenomenal growth comes from the massive capitalist development along the southeastern coast in cities like Guangzhou (formerly known as Canton). By opening up such cities to foreign investment and drawing in people from the countryside through land privatization, the country became a showcase for capitalist modernization.

In fact, the country that was a counter-revolutionary dagger aimed at China enjoyed the same kind of “take-off”. I speak of Taiwan that was home to Chiang Kai-shek’s KMT that dreamt of overthrowing communism on the mainland. This chart should give you an idea of how dramatic the poverty reduction was.

It appeared in an article titled “Openness, Growth and Poverty: The Case of Taiwan” that appeared in the 2007 World Development journal. It makes one wonder whether, despite all the hostility between Taiwan and the mainland, that perhaps Deng Xiaoping consciously emulated its success. The article states:

Like many developing countries, poverty was widespread in Taiwan during the early postwar years. After the government decisively reoriented its development strategy from import substitution toward export promotion at the end of the 1950s, the exceptional economic growth has not only brought with it the well-known record of income distribution, but has also resulted in rapid poverty reduction. What Taiwan has experienced in the past four decades suggests that there is a close link between openness, economic growth and poverty reduction, and thus constitutes an ideal case for a country-specific study …

But does rapid capitalist growth, even when combined with generous social services as is the case in both China and Taiwan, serve as a benchmark for progress toward socialism? In China, there is lots of personal freedom. Unlike Iran, nobody gives a crap what clothes you wear or whether you walk down the street like a drunken sailor on shore leave. But like Iran, China will brook no challenge to the ruling party, which is closely tied to what Bernie Sanders calls the “billionaire class”. If workers want to press for higher wages and a relaxation of the killing pace at Foxconn, what happens? I recommend China Labor Bulletin to keep track of these encounters, especially the article titled “Swimming against the Tide: A short history of labour conflict in China and the government’s attempts to control it.” Among the findings:

Another report in 2009 by Hong Kong activist group Students and Scholars Against Corporate Misbehaviour (SACOM) showed that the 6,000 employees of the Tianyu Toy Company in Dongguan typically worked three hours overtime each day. During peak production times they worked four hours overtime a day and some workers complained they sometimes had to work through the night, with the longest continuous shift lasting 28 hours. Worse still, if the shift went past 9:30 pm, the company refused to pay overtime. And if employees refused to do overtime, they were fined 50 yuan. To prevent workers from walking out, the company held back a month and a half’s wages and, if workers resigned without their manager’s approval, they would lose one month’s wages.

Naturally, this kind of super-exploitation produces investment capital that can continue to build new factories that act as a magnet for the rural poor. When a peasant who earns about $100 per year loses his land due to modern day primitive accumulation, he could get a job at Tianyu Toy Company making $100 per month. Is this dramatic increase in wealth a step on the road to socialism?

Dic Lo’s articles are mostly written in non-Marxist journals and are meant to refute his neoliberal adversaries, who—compared to him—would accelerate the economic practices so that they would be line with those that prevail in India or Russia today. Basically, he is arguing from the standpoint of what used to be called a “mixed economy”.

You have to go back to Historical Materialism in 2001 for the one article he submitted to a Marxist journal, in this instance a special issue on the Asian financial crisis that began in Thailand in 1997. You can find an article in the same issue by the notorious ultra-leftist Paul Burkett titled “Crisis and Recovery in East Asia: The Limits of Capitalist Development”.

Lo’s article is titled “China After East Asian Developmentalism” and is much less technical that those written by him for a-list economics journals. In contrast to the smoking rubble of Thailand, Indonesia et al, China was barely impacted in the early 2000s. While he acknowledges that China shared some of the same “marketization” features as the Asian Tigers, it was protected from the financial superstorm by policies unique to China. Neither, however, have much to do with socialism.

The first was plain vanilla Keynsianism:

The East Asian financial and economic crisis, in conjunction with the steadily slowing down of economic growth in the domestic front, prompted the Chinese state leadership to adopt four major categories of anti-crisis policies from early 1998. The first was a range of welfare-state policies, which included raising the benefits for the retired and the unemployed, raising the pay of public-sector employees, and lengthening the paid holidays of workers. All these were aimed at reversing the trend of stagnant consumption expansion. The second category encompassed several Keynesian-type fiscal packages for expanding investment demand. These packages were financed by debt issuing on unprecedented scales. The third category encompassed policy measures to revitalise the state sector.

The revitalized state sector was embodied in the State-Owned Enterprises (SOEs) that for Michael Roberts, Dic Lo and all the other speakers at the SOAS workshop see as constituting the all-important socialist sector.

Let’s take a look at one of these socialistic SOE’s, the Anbang Insurance Group that attracted a lot of publicity this year for its bid to invest millions of dollars in a building owned by Jared Kushner. The largest shareholders are state-owned car maker Shanghai Automotive Industries Corp and Sinopec, a state-owned oil company Sinopec.

Of course, trying to figure out who exactly “owns” Anbang is not easy. Like many huge Chinese firms, they make discovery difficult as an American trade union found out when pressing charges against it for unfair labor practices as the Times reported in September 2016.

The Anbang shareholders in the Pingyang County area hold their stakes through a byzantine collection of holding companies. But according to dozens of interviews and a review of thousands of pages of Anbang filings by The New York Times, many of them have something in common: They are family members and acquaintances of Wu Xiaohui, Anbang’s chairman, a native of the county who married into the family of Deng Xiaoping, China’s paramount leader in the 1980s and ’90s.

You remember who Deng Xiaoping was, right? He was Mao Zedong’s successor who took “the capitalist road” in the first place. I guess his friends and relatives were quite happy with the NEP-type reforms since it put them in the position of buying the Waldorf Astoria and coming close to bailing out Trump’s son-in-law who will hopefully be arrested this week.

As should be obvious at this point, “state ownership” is a convenient fiction in China, especially since anybody can buy shares in such companies, including Western investors. For example, Roberts is impressed with the fact that the state-owned China General Nuclear Power Corp has begun to incorporate Western technologies, However, it is traded publicly on the Hong Kong Stock Exchange, as is the case with the largest Chinese SOE’s, and thus no different from any other capitalist firm. In the final analysis, it is the class character of those who own the means of production that determines their social role. While the number of shares available to outside investors has been relatively small, “reforms” enacted in 2015 to transform SOE’s into mixed enterprises will likely increase their numbers as indicated by the transformation of the second largest mobile carrier.

Unlike China today, Soviet Russia never had a stock exchange. The children of Soviet bureaucrats could never look forward to inheriting their daddy’s holdings like Donald Trump did from his father. That is true state ownership.

Although ownership data is difficult to come by, you can read an article co-authored by Curtis J. Milhaupt and Wentong Zheng titled “Beyond Ownership: State Capitalism and the Chinese Firm” on the Columbia University Law School website. It hones in on Ping An, another insurance company. The largest block of shares is owned by HSBC Ltd., a multinational bank that originated in Hong Kong even though most shares are owned by other SOE’s. In 2016, Mexican families sued the bank for money-laundering the drug proceeds of the Sinaloa Cartel that had killed members of their families, just the sort of outfit you’d want to help overcome the law of value, as Roberts put it.

Milhaupt and Zheng refer to the “blurred boundaries” between private and state-owned firms in China, as I have tried to establish. To get an idea of how tangled things can get, this is how they describe ZTE, China’s second-largest telecom:

According to the website of ZTE Holdings, it is one of the “national key SOEs” designated by the State Council. The third shareholder of ZTE Holdings, Zhongxing WXT (also known as Zhongxingweixiantong), is a private firm owned by a group of individuals, of whom the founder, Hou Weigui, holds the largest percentage (18%). According to the website of ZTE Holdings, it was the first firm in China to adopt a “state owned, privately managed” model in 1993. Under this so-called “ZTE model,” the majority state shareholders contractually authorize the minority private shareholders to assume sole responsibility for managing the firm, subject only to the requirement that the state shareholders be guaranteed a minimum rate of return. Under the ZTE model, therefore, a firm is an SOE from the standpoint of ownership, but a POE [privately owned] from the standpoint of management.

ZTE? Doesn’t that ring a bell?

Trump hammered it with sanctions Trump after it was discovered that they were selling their smartphones to Iran and North Korea. But lately Trump seems to be in a forgiving mood. First it was Jack Johnson, now it is ZTE.

All ZTE had to do was pay a $1 billion fine and let bygones be bygones. Those of good faith might think there was a quid pro quo since the Chinese government approved Ivanka Trump’s application for five trademark applications related to her fashion and homeware business just days before forgiving ZTE.

At the same time, according to Vanity Fair, the theme park developer MNC Lido City has partnered with the Trump Organization to land $500 million in Chinese government loans, with another $500 million from government banks. The Trump Organization will take in almost $3.7 million in licensing and consulting payments from Lido, along with another project in Bali. The company will also earn management fees, and be “eligible for additional unspecified incentives.” You see, this is not graft since Donald Trump turned over the reins of managing the Trump Organization Donny Jr. and Eric, but chose not to divest himself financially from the company.

This is how the capitalist state operates in China and the USA. Even Donald Trump understands that Xi Jinping’s Marxism is a con. After Xi tightened his control of the state in the same fashion as Modi, Erdogan, Assad and all these other scumbags, Trump mused: “He’s now president for life. President for life. No, he’s great. And look, he was able to do that. I think it’s great. Maybe we’ll have to give that a shot some day.”

 

May 4, 2018

Angels Wear White

Filed under: China,Film — louisproyect @ 8:05 pm

Purely by coincidence, “Angels Wear White” bears a striking resemblance to last year’s “The Florida Project”, a film I nominated for best of 2017. Like “The Florida Project”, most of the action in “Angels Wear White” takes place in a motel—in this instance on a seaside resort in southwest China’s that is bathed in sunlight. Like Sean Baker, the director of “Florida Project”, Vivian Qu’s film revolves around two women dealing with class and sexual oppression. Baker’s characters were a single mother forced into becoming a hooker out of economic desperation and her six-year old daughter who is the charismatic gang leader of the motel’s bored and restless children. Finally, like the “Florida Project”, “Angels Wear White” is an outstanding film that has the inside track for my nomination of best foreign language film of 2018.

In “Angels Wear White”, we first meet Mia who is subbing at the reception desk for her friend Lily who has a date with her boyfriend. Mia’s regular job is cleaning the rooms, doing the laundry and other menial tasks. On her lonely shift (the tourist season has not yet started), a middle-aged man approaches the desk with two young girls wearing white naval-style school uniforms in tow, with one of them wearing a blonde wig. Mia doesn’t bother to ask the man, who registers for adjoining rooms, what he is doing with the children since we can assume that such questions are not often asked in China, especially by a housekeeper who lacks a proper ID. Not long after the girls order four beers, Mia is at least concerned enough to keep an eye on the video security monitor. When she sees the two girls pushing the man out of their room, she decides to film the confrontation on her smart phone—an act that sets the narrative in motion.

Eventually, the children’s parents discover what took place and bring them to a clinic where an examination reveals that they have been raped. They oscillate between rage at the children for acting like sluts and at the man who took advantage of them.

It turns out that he is the police commissioner and a powerful figure in the small town, which obviously puts constraints on the investigation that begins after the medical exam. A lawyer for the prosecution contacts Mia about what she saw that night but is frustrated by the young woman’s reluctance to share information. Her boss, who understands power relations in the town, has warned her that she will be out of a job if she doesn’t keep her mouth shut. Since Mia is only 15 years old (played by the 14-year old actress Vicky Chen) and lacks a proper ID that would allow her to apply for other jobs, she is as vulnerable as the two children.

The girl in the blonde wig is named Wen. Like the waif in “The Florida Project”, she simultaneously street-smart and innocent. When her friend tells her in the clinic that their hymen has been broken, she asks, “What’s a hymen?” Tired of being rebuked by her mother who throws out her age-inappropriate garb and the blonde wig, she runs away and crashes at her father’s house. He is in the lower ranks of the village’s social order but determined to see that Wen get justice. Except for the prosecution attorney and Wen’s father, everybody seems willing to let bygone’s be bygone, especially since challenging the authority of the police commissioner leads up a blind alley. Even the parents of Wen’s friend are ready to accept his promise of a payoff in exchange for dropping the case.

If the story sounds like it is the Chinese counterpart to #MeToo, that is only part of the story. It is equally the story about those millions of workers, both men and women, who lack the protections afforded those with proper identification. In effect, they are internal undocumented workers. Known as the hukou system, it serves as both a social security number and an internal passport. Lacking proper documents, a migrant worker suffers super-exploitation in much the same way undocumented workers suffer in the USA. In Beijing, there have been raids on neighborhoods where migrants live that are as vicious as those on the refugee camps in France. The NY Times reported on November 30, 2017:

“Starting from today, demolish what can be demolished, don’t wait until tomorrow,” Wang Xianyong, a district official in southern Beijing, said in a speech to officials that leaked onto the internet. “If it’s demolished today, then won’t you be able to get a good night’s sleep?”

Initially, city leaders ignored the complaints from the displaced migrants. But as images of expelled workers dragging their belongings along streets on freezing nights appeared on social media, they ignited an unusually strong public backlash. Even some state-run news outlets have chimed in to criticize the rushed demolitions.

In the press notes for “Angels Wear White”, the director recounts her inspiration for making the film:

Once during a scouting trip, I saw a young girl, 8 or 9 years old, playing alone on a long flight of steps against a hilltop. It was approaching dusk and the area was deserted. The girl was happy to see us and volunteered to be our model as we shot videos of the area. She told me that her parents, migrant workers from a faraway province, were still at work; that her home was in a basement at the bottom of the hill; that she had no friends. She didn’t want to see us leave, and asked if we’d be back the next day. Are the young girls fine? I often wonder.

The film opened today at the Metrograph, NYC May 4 and will open in Los Angeles at Laemmle’s Music Hall on May 18.

April 12, 2018

The two degrees of separation between Robert Mercer and Chinese Communism

Filed under: Africa,China,Trump — louisproyect @ 8:58 pm

For more information on the graphic above, go to https://steemit.com/news/@cryptospreads/let-me-introduce-you-to-emerdata-ltd-a-data-processing-company-directed-by-alexander-nix-and-rebekah-mercer-among-other-shady

In yesterday’s NY Times, buried within an article on the problems Robert Mercer and his daughter Rebekah were having over the Cambridge Analytica fallout, there was startling revelation:

The Facebook scandal has hit just as the Mercers appear to be expanding their business in the world of big data. Public records show that Ms. Mercer, her sister Jennifer and Mr. Nix serve as directors of Emerdata, a British data company formed in August by top executives at Cambridge Analytica and its affiliate, SCL Group, according to British corporate records.

Incorporation documents state that Emerdata specializes in “data processing, hosting and related activities.” An SCL official told Channel 4, a British television station, that Emerdata was established last year to combine SCL and Cambridge under one corporate entity.

Exactly what ambitions the Mercers, who joined the Emerdata board last month, have for the company is unclear. Another Emerdata director, Johnson Ko Chun Shun, is a Hong Kong financier and business partner of Erik Prince — the brother of the education secretary, Betsy DeVos, and founder of the private security firm formerly known as Blackwater. Mr. Ko, who declined to comment, is a substantial shareholder and deputy chairman in Mr. Prince’s Africa-focused logistics company, Frontier Services Group.

Mr. Ko and Mr. Prince have links to the Chinese government: Another major Frontier investor is Citic, a state-owned Chinese financial conglomerate that for decades has employed the sons and daughters of the Communist Party’s elite families.

So, we can assume that this new company Emerdata is just a new name for the SCL Group, a British corporation that was the mothership for its American offshoot Cambridge Analytica. The NY Times states that Emerdata’s ambitions are unclear but you have to assume that it will have the same nefarious aims as the corporations under the big umbrella it provides, namely to use powerful computer systems to analyze both public and private data in order to promote crooked reactionaries like Donald Trump. While some leftists scoff at the idea that Cambridge Analytica was anything but smoke and mirrors, the idea that this kind of operation is going on in the USA or anywhere else is a threat to democracy just as much as the ability of the Mercers, the Koch brothers and any other plutocrat to pour millions into election campaigns in the aftermath of the Supreme Court ruling on Citizens United.

If you need any other proof of Emerdata’s criminal tendencies, just consider the connections to Erik Prince. Prince’s Blackwater was a private security firm that was involved with the murder of 15 Iraqi civilians in 2007. He is also under investigation for serving as Trump’s envoy in a meeting with Putin’s representative on Seychelles island in January 2017. The Intercept reported:

The identity of the Russian individual was not disclosed, but on January 11, a Turkish-owned Bombardier Global 5000 charter plane flew Kirill Dmitriev, CEO of the Russian Direct Investment Fund, to the Seychelles, flight records obtained by The Intercept show. Dmitriev’s plane was an unscheduled charter flight and flew to the island with two other Russian individuals, both women. The RDIF is a $10 billion sovereign wealth fund created by the Russian government in 2011.

Prince is not on the Emerdata’s board but his associate Johnson Ko Chun Shun is. Ko and Prince are the prime movers in Frontier Services Group (FSG), an innocent-sounding name for a company that functions as China’s Blackwater in Africa. To keep the restless natives at bay, Prince and Ko’s firm will serve as a subcontractor lining up goons to keep Chinese mines, oil drilling, plantations, etc. safe.

The biggest Frontier Services Group shareholder is the Citic Group, an investment fund owned and controlled by the People’s Republic of China. In addition to its Africa operations, FSG has signed contracts to support China’s One Belt, One Road initiative including building a series of bases in China’s Xinjiang Province, where the restless Uighur natives have to be kept in line as Communist “development” goes full steam ahead. I guess you all know what the One Belt, One Road initiative is all about. That’s China’s bid to defeat the cruel, imperialist West. And who better to smooth the path in front of the initiative is Erik Prince who is a past master of killing restless natives.

Most of FSG’s business is in South Sudan, however. That’s where China’s new colonial aspirations reach highest. In order to protect its oil drilling sites from attacks by militias representing tribes hostile to the state’s partnership with China, the FSG can be a life-saver for superprofits.

For a comprehensive report on FSG, I recommend the 10 page report from the Oakland Institute. It states:

Prince has spent most of his post-Blackwater years building rapidly deployable logistics, intelligence, and security capacity. His new logistics company, Frontier Services Group (FSG), has outposts in Africa, the Mediterranean region, and will soon be present in Central Asia.

Before launching FSG, Prince began assembling logistics assets in Africa to back his financial investments within his equity fund FRG. The fund advertised to external investors its ability to “leverage unique relationships and experienced management, as well as existing security and logistics capabilities,”78 allegedly a competitive advantage to access untapped subsoil resources in risky and infrastructure-lacking areas of Africa.

With FRG’s first venture, Prince secured an agreement to build an oil refinery in South Sudan’s Upper Nile State, in the locality of Thiangrial. This was a project with heavy logistics and security needs, for which Prince tapped his network of private security connections. A long time colleague, John “JP” Palen, was asked to help coordinate plane transportation for surveys and oil sampling at the site. Palen, a former US Air Force pilot, worked at Prince’s Presidential Airways from 2006 to 201081 before being employed at Transerv, an aircraft company linked to Prince’s R2 and PMPF projects.

Okay, so what’s going on here?

The most reactionary elements in American politics—the Mercers and Erik Prince—are in a alliance with the Chinese Communist Party to protect its assets in Africa and anything that stands in the way of its One Belt, One Road initiative that unfortunately some have mistakenly viewed as a big step forward toward a multipolar world. Perhaps it was easier to sustain illusions in BRICS, the One Belt, One Road initiative, and Chinese “communism” at a time before China became much more of an obvious colonizing presence in Africa. And for those sitting on the fence, these ties to Robert Mercer and Erik Prince should dispel all illusions.

December 4, 2017

Trump, Russia vs China and China Industrialization

Filed under: China,Trump — louisproyect @ 2:23 pm

(I received this article from Lynn Henderson, a former member of the American SWP, yesterday. Henderson worked as a railroad brakeman/switchman for 25 years.  He was vice-president of United Transportation Union Local 1000, one of the largest UTU locals in the country.  He was editor of the Intercraft newspaper Straight Track and is currently a contributor to Socialist Viewpoint magazine.)

 

Trump, Russia vs China and China Industrialization

The following is a response to a 7/29/17 letter from Dave Gilbert who you may know is a political prisoner serving a long term in federal prison.  Over the past year Dave and I have been in a fruitful exchange of ideas, a recap of which was printed in the September/October 2017 issue of Socialist Viewpoint.   In his latest letter Dave posed a number of issues: the character of Trump’s role as leader of the America First/nationalist wing, the disputes in the U.S. ruling circles over Russia vs China, China’s industrialization, its future evolution and impact on relations with the “Global South” and William Robinson’s concept of a new transnational capitalist class (TCC).    Lynn Henderson Nov. 2017

Dear Dave,

Let me finally try to take up some of the points you raised in your 7/29/17 letter.  First, as I indicated in my short note last August, you are right in observing that Trump is hardly a “strategically coherent representative” for the emerging “nationalist” faction in the U.S. ruling class.  He is increasingly seen as erratic and unreliable, particularly lately with the growing crisis over North Korea.   Neither wing of the emerging split in the U.S. ruling class wants to stumble into another Asian war, let alone a nuclear war, over North Korea.  Steven Banning, who perhaps represents a more reality based strategy for the nationalist faction, argues that it’s now too late to prevent a nuclear North Korea.  Rather U.S. imperialism needs to concentrate on the real threat, the growing industrial power of China.

But it is Trump who got elected president proclaiming a return to an aggressive nationalist/ America First line, and successfully mobilized racist, anti-immigrant sentiment in support.  Whatever his other limitations, the coalescing nationalist wing feels stuck with him and they are falling in line behind him, at least for now.  Even more worrying for the nationalist/American First wing is their growing suspicion that Trump’s only real political commitment is to his own personal wealth and ego.  Bannon in an August interview with The Weekly Standard gives voice to this sentiment; “The Trump presidency that we fought for, and won, is over.  We still have a huge movement, and we will make something of this Trump presidency.  But that presidency is over.”

More broadly, most of the elected politicians in both capitalist parties are in confused disarray over the growing split in the U.S. ruling class.  They are not confident over how the division will play out, and what position will best serve their own political futures in the end.  As Marxists we, unlike bourgeois historians and political philosophers, adhere to the historical reality and validity of a ruling class. But this of course does not mean that any particular ruling class at any particular time is unified and in fundamental agreement.  Or even that a ruling class under all circumstances, especially under the stress of a real crisis, is capable of correctly assessing its own best interests.

China

I think the most pressing questions in your letter were those concerning China.  One — how did China, while using a market economy, become more of an economic threat than the USSR did?  And two – whether China is emerging as an imperial power and what does this say about the terms of their economic relationships with Third World countries?

To begin grappling with these questions we have to again go back to the world that emerged out of WWII, and its subsequent evolution.  As I previously wrote, U.S. imperialism was the completely dominant winner of WWII.  It won WWII not just against the Axis powers but against its own allies as well.  With the exception of the United States, the entire capitalist world came out of WWII in social, political and economic shambles.  The question then before U.S. imperialism was how should it proceed?

At the end of World War II, one option the U.S. government had was the unique opportunity to use its economic and military power to dismantle the major industrial corporations of its competitors. Under the so-called Morganthau Plan, Germany was to be forcibly de-industrialized and turned into a decentralized collection of agricultural states much like it had been in the middle of the 19th century. The U.S. also had similar plans for Japan. Indeed, why stop with Germany and Japan? Why not forcibly dismember the capitalist industry of all of the United States’ major potential competitors, including its so-called allies Britain and France? After all, the logic of capitalist competition among nation-states pointed in this direction.

If that had been done, U.S. corporations would have had the entire world market—both as buyers and sellers—for themselves. If the U.S. government had followed an “America First” policy in the years after 1945—and gotten away with it—it would have meant that the stock market value of U.S. corporations would have soared to vastly higher levels than is actually the case today. The U.S. would have been “great” indeed!  But as we know, the U.S. government didn’t dare attempt this, especially with the threat of the Soviet Union and the continued example of the 1917 Russian Revolution still before what would have been an increasingly impoverished and radicalizing European proletariat.

Instead, with the launching of the “Marshall Plan” Washington adopted a bi-partisan foreign policy, supported by leaders of the Democratic and Republican parties alike, buttressing a world empire in which the corporations of Britain; an economically resurgent Germany; and an economically resurgent Japan, France, Italy, Australia, New Zealand, and so on could actually compete with U.S. corporations, cooperatively exploit the Third World, and appropriate a portion of the surplus value for their non-American owners (what you have labeled “free market imperialism”).  Things were made easier by the fact that the world market in the wake of the Great Depression and the massive physical destruction of WWII, had entered an extended phase of rapid expansion.

A key element in organizing this “New World Order” was the 1944 Bretton Woods Conference in which 44 nations met in New Hampshire to “negotiate” a new international monetary system.  No real negotiations took place.  A completely dominant U.S. imperialism, holding all the cards, could and did dictate the terms.  The alternative other participants faced was some version of the Morganthau Plan.

The lynchpin of the Bretton Woods system was the new privileged status for the U.S. dollar.  All international accounts and trade would now be settled in dollars.  Dollars that the U.S. Treasury could just print.  It was true that dollars could be converted to gold at a fixed rate of $35 per ounce, which was redeemable by the U.S. government.  But the U.S. government held most of the world’s official gold reserves, and what the rest of the world desperately needed and wanted was not gold but dollars to spend on American manufactured goods – cars, steel, machinery, etc.

However, as manufacturing began to recover in the rest of the capitalist world, resistance to the Bretton Woods system and the privileged position of the dollar began to grow. In Europe the Bretton Woods system began to be characterized as “America’s exorbitant privilege” — an “asymmetric financial system” where non-US citizens “see themselves supporting American living standards and subsidizing American multinationals”.  In February 1965 French President Charles de Gaulle announced his intention to exchange its U.S. dollar reserves for gold at the official exchange rate.  By 1970 other nations began to demand redemption of their dollars for gold.  Underlying this shift was the broader reemergence of international capitalist competition, especially in the sphere of manufacturing.  In 1950 the U.S. share of the world’s total economic output was a whopping 35%.  By 1969 it had dropped to 27%.  The U.S. economy was faced with rising unemployment (6.1% August 1971), recession and the threat of deeper recessions.

U.S. ruling circles became convinced that a policy of massive deficit spending and monetary expansion could successfully stimulate the economy and reverse its decline.  The 1960s represented the flood tide of neo Keynesian economics in both policymaking and academic circles. If there was one time in the history of modern capitalism when the academic and political mainstream believed that they could finally beat the “business cycle” once and for all, it was then. In 1971 President Richard Nixon was reported to say, “We are all Keynesians now.”   Even many Marxists seemed foolishly willing to accept these claims.

But implementing such a policy was impossible as long as the dollar was tied to gold, which would allow nations throughout the world to flee an inflating dollar by demanding the U.S. Treasury redeem their dollars for gold. On August 13,1971 fifteen high ranking White House and Treasury advisors met secretly with Nixon at Camp David and unilaterally abandoned the Bretton Woods agreement by suspending the convertibility of the dollar into gold.  Historically this is known as the “Nixon Shock”.

While the rest of the capitalist world was certainly not happy with the unilateral ending of dollar/gold convertibility, nothing else was available to function as the world’s reserve currency and the essential vehicle for carrying out world trade.  In the final analysis, U.S. overwhelming military power enabled the U.S. to convert the dollar into a token currency with an internationally forced circulation.

Now that this “metallic majesty” had been overthrown, the U.S. government and central bank believed they could guarantee “effective demand” sufficient to buy the vast and ever-growing quantity of commodities U.S. capitalist industry was churning out.  Throughout the 1970’s these policies were now put into effect with massive deficit spending and aggressive monetary expansion.  But the results were not as expected and predicted.  Rather than stimulating the economy and returning the growth rates of the 50’s and 60’s, the result was sharply increasing inflation peaking at almost 15% by the spring of 1980.  This crisis required the coining of a new term in economic jargon – stagflation.

But stagflation was much more than a crisis for just the U.S. economy.  The rest of the world began losing confidence in the dollar as the reserve currency.  Even though the dollar was no longer officially convertible to gold, it began to be dumped for gold, whose price soared to over $800 an ounce.  Conversely the dollar’s value plummeted on the foreign exchange markets. While many capitalist countries have experienced runaway inflation or even hyper-inflation, runaway inflation has never hit the central or reserve currency. If the dollar succumbed to runaway inflation, it would drag down every other capitalist currency with it. If this were allowed to happen while the dollar remained the reserve currency, the result would certainly be by far the worst financial crisis—not excepting the super-crisis of 1929-33— in the history of capitalism.

U.S. imperialism was left with no alternative but to move aggressively to crush the dollar inflation it had inadvertently set off.  The job was assigned to Paul Volcker, a prominent investment banker who was appointed chairman of the Federal Reserve.  Over the next two years he quickly more than doubled the prime interest rate to an unheard-of level of over 20%.  This harsh medicine, known as the “Volcker Shock”, brought inflation somewhat under control but not without significant costs, precipitating the sharp 1981 recession.

U.S. imperialism and its Federal Reserve, admittedly in a pragmatic and empirical way, learned that contrary to widespread hopes in the 1960s, replacing the gold standard with paper money does not enable capitalist governments and central banks to expand demand up to the physical ability to produce and thus abolish periodic crises of general overproduction under capitalism.

But beyond the 1981 recession there was another even more important consequence of the rise of the rate of interest above the rate of profit in the wake of the dollar crisis. The period of extremely high but declining interest rates that followed the Volcker Shock led to a massive destruction of heavy industry in the U.S., Great Britain and to a lesser extent Western Europe.  This occurred in two interrelated ways, the first was called “financialization”; the second, a particularly aggressive form of “globalization”.

Soaring interest rates made capital investment in the actual production of things less and less profitable, but investment in various forms of financial manipulation extremely profitable.  Capital shifted away from manufacturing to a proliferation of new (and often risky) exotic financial instruments – hedge funds, derivative securities, credit default swaps, securitized and bundled mortgages, etc.   Between 1973 and 1985, the U.S. financial sector accounted for about 16 percent of domestic corporate profits.  In the 1990s, it increased to 21 percent to 30 percent.  In the first decade of the 21st century it soared to 41 percent of all U.S. domestic corporate profits.  General Electric, for instance, became one of the nation’s posterchildren for this development, shifting from one of the premier U.S. manufactures to more and more a financial, money lending corporation.

Then as interest rates fell, and positive net profits in manufacturing returned, capital in the form of money and loan money capital was free to invest in new areas. It chose to do this not in the old industrial areas of Britain, the United States and Western Europe but in areas where the rate of profit was far higher, leading to what has come to be known as “globalization”.  No matter how much capitalists speak about “love of country” as the highest virtue, the capitalists themselves—whether they are American, German, Japanese, Russian or Chinese—put profit first, last and everything in between.

Two political changes that occurred during the 1980s and 1990s played a crucial role in making this aggressive globalization possible.  First, the counterrevolutionary destruction of the Soviet Union and its Eastern European “socialist” allies meant that capitalists of the U.S., Britain and Western Europe became much more confident that capital invested outside the imperialist countries would be safe.  It even raised expectations among many capitalist leaders—such as George W. Bush—that something like pre-World War II colonialism could be restored.  But this time it would be the U.S. empire rather than the British empire that would be the chief jailers of the colonized peoples.  It led to the Iraq invasion and other adventures in the Middle-East and now Africa.

The second crucial development was the outcome of the great Chinese Revolution of the 20th century. With the rise of Deng Xiaoping to power in 1978, the Chinese revolution had finally run its revolutionary course. Unlike in the Soviet Union however, in China while there was political reaction—epitomized by Deng’s “it is glorious to get rich” slogan—there was no similar counterrevolution.

When the dust finally settled after decades of revolution, civil war, counterrevolution, Japanese occupation, still more civil war, the liberation of 1949 when China “stood up,” and finally the Cultural Revolution, China emerged with a strong central government independent of western imperialism. The new government was eager to attract foreign capital and willing to respect bourgeois private property rights in order to achieve rapid economic development along capitalist lines—but on its own terms.  It was determined not to allow a repeat of what had occurred in the Soviet Union – the chaotic collapse of the Communist Party apparatus and a Western influenced privatization and deindustrialization of the economy.

The defeat of U.S. imperialism in the Vietnam war had led to yet another crucial development favoring China.  In the 1970s, unable to break the resistance of the peoples of Indochina, the Nixon administration finally decided the time had come to normalize relations with the People’s Republic of China, including, most importantly, allowing China access to the world market, something they never did with Russia as long as the Soviet Union existed.  Nixon-Kissinger had their own motives in this – driving a wedge between any existing and future Russia-China alliance – increasing long existing antagonisms between China and Vietnam – and also the possibility of opening China to U.S. investment.

Handed down from the pre-revolutionary past, the new China possessed a gigantic peasantry numbering in the hundreds of millions accustomed to a very low standard of living and hard manual labor. This peasantry served as the source for an industrial proletariat willing to put up with a much higher rate of surplus value than the workers of North—and even Latin—America, Western Europe or modern Japan.  Huge amounts of foreign investment, especially U.S. investment flowed into China.  What the United States—or rather the United States capitalists—wanted most of all from China was the lion’s share of the surplus value produced by the Chinese working class. Russian workers produce very little surplus value compared to what the U.S. capitalists could appropriate from Chinese workers in the form of profit, interest and dividends.

The problem from the viewpoint of the U.S. capitalist class and its political representatives—the Party of Order of both Democrats and Republicans and the emerging Trump America First gang—is that the U.S. capitalists in squeezing huge amounts of surplus value out of the Chinese have been forced to develop China’s productive forces at the same time.

As a result of the convergence of historical forces described above, including the failed attempt of capitalist governments and central banks to solve the problem of periodic crises of general overproduction through issuance of paper money, in an amazingly short period of time China emerged as the country with the highest absolute level of industrial production—though not on a per capita basis. Meanwhile, the imperialist countries of the U.S., Britain and Western Europe have become increasingly de-industrialized as result of the operation of the same economic laws.

In order to make the empire last for even 70 years—a very short period historically—the U.S. had to give up much of its domestic industrial production. This initially was no great sacrifice for the U.S. capitalists because in exchange they have, at least up to now, vastly increased their ability to exploit the industry and workers of other nations. Herein lies the answer to the riddle of why the U.S. stock market has been able to perform so much better after the “Great Recession” than was possible after the Great Depression, despite the vastly stronger recovery of U.S. industrial production during and after the Great Depression compared to the feeble recovery of U.S. industrial production since the Great Recession. But as U.S. post WWII hegemony continues to disintegrate, this becomes harder and harder to maintain.

The Trumpists fear that sometime in the not too distant future, the U.S. capitalists will have to be content with a far smaller share of the global surplus value produced. Among the consequences when this comes to pass will be that U.S. capitalists will have much less surplus value to maintain—actually bribe—a relatively large but already shrinking middle class, which includes the “aristocracy of labor” inside the U.S.  Therefore, Trump and his gang believe, the U.S. shouldn’t let itself be distracted by an avoidable war—or even war of words—with Russia. Trumpists believes that it is not Russia but China that must be confronted and must be confronted now.  (I should say here that throughout this analysis I have drawn heavily on Sam Williams excellent blog, “A Critique of Crisis Theory” and encourage readers to avail themselves of his monthly postings, past and future.)

China’s Direction and Future Evolution

The other crucial China question you raise is whether China is emerging as an imperial power, and what does this mean for their future economic relationships with Third World countries?

After the victory of Deng Xiaoping’s grouping within the Central Committee of the ruling Communist Party of China in 1978, China has industrialized through the massive import of foreign capital, the development of capitalist industry, and a massive expansion of exports. The economic laws governing China’s rapid industrialization since 1978 have been the laws that govern the development of capitalism.

The Chinese Communist Party itself describes the current Chinese economy as a market economy and not a planned economy like was the case with the Soviet economy.  During Deng’s rule the Chinese Communist party developed the slogan “Socialism with Chinese Characteristics” to provide an ideological footing for the Party’s embrace of market remedies.  At the just completed Communist Party Congress, which meets every five years, President Xi Jinping introduced a new slogan which was incorporated into the constitution; “Thought on Socialism with Chinese Characteristics for a New Era”.

While this rather clunky new phrase could be open to many interpretations it is clarified by the dominant theme of the Congress and President Xi’s repeated central goal — “Make China Great Again”.  And further, only the Communist Party of China can guarantee this “China Dream” of national rejuvenation.  This slogan seems to be an echo of Trump’s “Make America Great Again”, but in reality, the two slogans encompass diametrically opposed world strategies.

The Trumpists believe that to “Make America Great Again” U.S. imperialism must abandon the globalizationist strategies it followed since the end of WWII, including promoting “free trade” and multinational trade agreements which are no longer in its interests.  Rather the United States needs to return to a policy of aggressive U.S. nationalism, including, when necessary, protectionist trade policies.  From now on, the U.S. government should directly use its state power to enrich U.S. corporations at the expense of the corporations of other countries, including so-called “allies” just like was done in the “good old days” before 1945.  The U.S. is still the largest economy in the world and the planet’s overwhelmingly dominant military power.  Before China becomes any stronger it should use that leverage to impose its economic will.

China on the other hand, as the world’s most rapidly expanding manufacturing power, is now its strongest proponent for globalization, “free trade”, open markets and multinational trade agreements.  Under China’s “One Belt, One Road” initiative, which is aimed at creating a modern version of the Silk Road, a network of trading routes from China to Africa and Europe, it has launched a massive economic outreach dwarfing even the Marshall Plan of U.S. imperialism following WWII.

A nervous May 18, 2017 New York Times editorial warns: “China clearly aims to dominate the international system… shaping how vast sums are spent and where, and which laws are followed or not – it could upend a system established by Washington and its allies after World War II.”

Through direct investments, loans, financial aid, construction and engineering expertise, China is penetrating the economies of numerous countries it considers among its geopolitical priorities.  One revealing example is the NATO member Greece.  China has poured money into its key Mediterranean port of Piraeus, considered the “dragon head” of China’s vast “One Belt, One Road” project.  “While the Europeans are acting towards Greece like medieval leeches, the Chinese keep bringing money,” said Costas Douzinas, the head of the Greek Parliament’s foreign affairs and defense committee and a member of the governing Syriza party.

And it is not just construction projects.  As Europe’s banks demanded the gutting of Greek pensions and sharp tax increases to guarantee repayment of their predatory loans, the Chinese offered to throw Greece a lifeline by buying toxic Greek government bonds.

Meanwhile China has transformed Piraeus into the Mediterranean’s busiest port, investing nearly half a billion euros through the Chinese state-back shipping conglomerate Cosco.  As a result, Cosco now controls the entire waterfront through its 67 percent stake in the port.  With a rueful chuckle, Mr. Douzinas comments; “It’s a kind of neocolonialism without the gunboats.”

Today the ruling Communist Party of China still proclaims its ultimate aim is to build a communist society in China, if only in a distant future.  But the party explains that to do this, China must go through a preliminary stage called –“socialism with Chinese characteristics,” or most recently — “Thought on Socialism with Chinese Characteristics for a New Era”.

While periodically the party does launch anti-corruption crack downs on individual capitalists, the size and weight of this sector continues to grow.  In his speech at the opening of the Communist Party Congress, President Xi proclaimed the party would “inspire and protect the spirit of entrepreneurship.”  China now has 647 billionaires in American dollar terms, according to The Hurun Report, which claims to track wealth in China.  Many of these billionaires began as members of the Communist Party, others later acquired party membership.  All of this poses the question, what is the probable future evolution of the China state and its economic relationship with other nations?

Any assessment of the future direction and evolution of China has to take into account the deep impact of Stalinist ideology on the Chinese Communist Party.  An impact that goes back at least as far as the slaughter of the Chinese urban proletariat in the 1927 counter-revolution lead by Chiang Kai Sheki, who had been made an honorary member of the Third International by Joseph Stalin.

The Stalinist bureaucracy and leadership that successfully displaced the original Bolshevik-Leninist revolutionaries in the Soviet Union had many reactionary characteristics – authoritarianism, opposition to worker’s democracy, oppression of national minorities, material privileges based on corruption, etc.  But the essence of Stalinism, the core of its counter-revolutionary character, was its abandonment of the Leninist commitment to international revolution, its abandonment of international class solidarity.  Under the new Stalinist rubric of “Building Socialism in One Country” the role of the world proletariat, and the task of Communist Parties outside the Soviet Union, was not socialist revolution, but reduced rather to that of border guards for the Soviet Union and its conservatized bureaucracy.

The People’s Republic of China today, with its access to the world market and its aggressive “One Belt, One Road” strategy, is penetrating and influencing the world economy in ways which were never available to the Soviet Union.  But like the Stalinized Soviet Union, in word and deed, the Chinese Communist Party makes clear its goal in this is not international class solidarity, let alone socialist revolution.  Rather its aim is restricted to developing political and economic accommodations with select capitalist and third world regimes that further its “silk road” trade expansion.

In the Soviet Union the left opposition to the consolidating bureaucracy and its developing counter-revolutionary politics originally centered on winning the party back to an internationalist revolutionary course.  But after the Stalinist role in the defeat of the 1927 Chinese revolution, followed by the victory of Nazi fascism in Germany, with no real fight from what was then the largest communist party in the world outside the Soviet Union — a Rubicon had been crossed.  Reform of the Stalinized Russian Communist Party was no longer considered a possibility.  Instead, what was required was a political revolution that would remove the Stalinist leadership and its bureaucratized base from power.  Leon Trotsky, the principal leader of the left opposition, summed up the situation in 1938 with his now famous prognosis: “There are now only two possible courses for the Stalinist bureaucracy in the Soviet Union. Either the bureaucracy, becoming ever more the organ of the world bourgeoisie in the workers’ state, will overthrow the new forms of property and plunge the country back to capitalism; or the working class will crush the bureaucracy and open the way to socialism.”

While China and its communist party has its own history, and is certainly not a carbon copy of the Soviet Union, I believe the prognosis and dichotomy laid out by Trotsky in 1938 very much applies to today’s China.  China in its amazing industrialization, even while carried out by capitalist methods, is creating a massive, modern proletariat, with tremendous revolutionary potential.  Counterposed to this is the increasing power of an internal capitalist class.  The eventual outcome of course remains an open question.  A successful socialist revolution elsewhere in the world, especially in an advanced capitalist country, would have a decisive positive impact on the outcome.

_________

 

In your 7/29/17 letter you refer to William Robinson’s concept of a new “transnational capitalist class”.  While thinking Robinson may go “too far” you believed the concept has some validity in understanding present day global capitalism.   Here I pretty much disagree.   I believe the concept of the Transnational Capitalist Class is shot through with fuzzy thinking which is only made possible by stripping the concept of the nation-state of any class character.  For Robinson, globalization is reactionary.  It is reactionary because globalization downgrades the institution of the nation-state.  Robinson believes it is only through intervention in the nation-state that the most anarchic and most destructive elements of unrestrained capitalism can be brought under some control.  Robinson explains, Neo-liberalism facilitated the rise of transnational capital, which breaking free of the confines of the nation-state, allows for unlimited concentration of wealth without any countervailing restraints.

But concentrations of wealth don’t automatically drop from the sky out of some abstract neo-liberalism – they require policies, actions, and the structure of a capitalist nation-state.  No capitalist enterprise no matter how large and globally oriented exists separate from and outside its particular nation-state in some kind of imaginary “Daddy Warbucks” universe.    Robinson’s confused view of the nation-state and TCC developed and acquire for some a seeming plausibility, only under the completely unique conditions of U.S. global hegemony following WWII.  A period (free market imperialism) in which U.S. capitalism found it was to its temporary advantage to used its overwhelming dominance to discourage aggressive inter-imperialist competition and instead organize a cooperative exploitation of the TW – which, at least initially, worked to its advantage.

A number of months ago Socialist Viewpoint was considering printing an article by Robinson entitled, “Capitalist Crisis and Trump’s War Drive”.   While in the past I have not reviewed or participate in selecting what articles appear in S.V. here they asked my opinion.  I separately include my response and recommendation.

Capitalist Crisis and Trump’s War Drive

Robinson makes the case that there is a growing world capitalist crisis fueling a Trump war drive.  He lists a series of points supporting this, many of which we would not necessarily disagree with.

  • S. rulers have often launched military adventures abroad to deflect attention from political crises and problems of legitimacy at home — Trump is facing challenges to his legitimacy and falling approval ratings.
  • Trump proposes an increase of $55 billion in the Pentagon budget and threatens military force in a number of hotspots around the world.
  • Cyclical crises, or recessions, occur about every ten years in the capitalist system and we’re due. Structural crisis occurs every 40-50 years and we’re due there also.
  • Capitalist globalization has also resulted in unprecedented social polarization worldwide. Given such extreme polarization of income and wealth, the global market cannot absorb the output of the global economy making a new crash practically inevitable.
  • The increased raiding and sacking of public budgets. Public finance has been reconfigured through austerity, bailouts, corporate subsidies, government debt and the global bond market as governments transfer wealth directly and indirectly from working people.

However, throughout his article is a confused analysis which draws heavily on the ideas of the anti-globalization movement of the past decade.  Robinson is particularly influenced by a wing of the anti-globalist movement that claims that globalization has produced a new stage of international capitalism in which the capitalist class no longer operates primarily through the institution of the nation-state but rather through huge international capitalist corporations that stand above and separate from the traditional nation-state.  He calls this new development the “transnational capitalist class (TCC)”. This leads him into all kinds of non-Marxist dead-end conclusions.

In the article Robinson claims for instance the structural crisis, of “the Great Depression of the 1930s, was resolved through a new type of redistributive capitalism, referred to as the ‘class compromise’ of Fordism-Keynesianism, social democracy, New Deal capitalism, and so on.”  And further: “Capital responded to the structural crisis of the 1970s by going global. The emerging transnational capitalist class, or TCC, promoted vast neoliberal restructuring, trade liberalization, and integration of the world economy.”

First, the structural crisis of the Great Depression, in so far as it was “resolved”, was not resolved by some “class compromise” but by the horrors of WWII.  His concept of an “emerging transnational capitalist class” represents a rejection of the Marxist concept of the nation-state as the chief instrument of a ruling class, and its government as essentially the executive committee of that ruling class. Robinson sees the nation-state and its government entirely differently.  He sees the nation state as an arena in which progressive forces have the possibility of curbing some of the worst abuses of unrestrained capitalism.  Globalization and TCC by downgrading the state is reducing that possibility.

A clearer and more detailed presentation of Robinson’s views are contained in his July 2014 interview for the publication Truthout:

How do we explain such stark inequality? Capitalism is a system that by its very internal dynamic generates wealth yet polarizes and concentrates that wealth. Historically a de-concentration of wealth through redistribution has come about by state intervention to offset the natural tendency for capital accumulation to result in such polarization. States have turned to an array of redistributive mechanisms both because they have been pressured from below to do so – whether by trade unions, social movements, socialist struggles, or so on – or because states must do so in order to retain legitimacy and preserve at least enough social peace for the reproduction of the system. A great variety of redistributive models emerged in the 20th century around the world, and went by a great many names – socialism, communism, social democracy, New Deal, welfare states, developmental states, populism, the social wage, and so on. All these models shared two things in common. One was state intervention in the economy to regulate capital accumulation and thus to bring under some control the most anarchic and most destructive elements of unrestrained capitalism. The other was redistribution through numerous policies, ranging from minimum legal wages and unemployment insurance, to public enterprises, the social wages of public health, education, transportation, and housing, welfare programs, land reform in agrarian countries, low cost credit, and so on.

But capital responded to the last major crisis of the system, that of the 1970s, by “going global,” by breaking free of nation-state constraints to accumulation and undermining models of state regulation and redistribution. Neo-liberalism is a set of policies that facilitate the rise of transnational capital. As transnational capital has broken free of the confine of the nation-state, the natural tendency for capitalism to concentrate wealth has been unleashed without any countervailing restraints. The result has been this dizzying escalation of worldwide inequalities as wealth concentrates within the transnational capitalist class and, to a much lesser extent, the better off strata of middle classes and professionals.

I don’t believe there is anything to be gained by printing Robinson’s article.  If Socialist Viewpoint did print it, we would have to devote considerable space to answering his completely wrong theories of transnational capitalism and everything that flows from it, which when raised more than a decade ago was an extremely weak argument and today has become even more irrelevant.  Capitalists today are increasingly open about the need to aggressively use their own particular nation-state in the intensifying struggle of international capitalist competition. Ironically no one is more vocal in this than “America First” Donald Trump in his belligerent call for a more aggressive economic nationalism.

October 30, 2017

China’s State-Owned Enterprises: a reply to Michael Roberts

Filed under: China,economics — louisproyect @ 7:29 pm

Michael Roberts

Although this article will be critical of British economist Michael Roberts, I strongly recommend his blog that features several well-researched and thoughtful articles a week, including one on China that I will be commenting on now. Despite my disagreement with his analysis, I can at least recommend it as a source of valuable statistics on the remarkable growth of the Chinese economy. Of course, we are at odds on how to characterize its class character. Roberts writes:

This brings us to the question of whether China is a capitalist state or not? I think the majority of Marxist political economists agree with mainstream economics in assuming or accepting that China is. However, I am not one of them. China is not capitalist. Commodity production for profit, based on spontaneous market relations, governs capitalism. The rate of profit determines its investment cycles and generates periodic economic crises. This does not apply in China. In China, public ownership of the means of production and state planning remain dominant and the Communist party’s power base is rooted in public ownership. So China’s economic rise has been achieved without the capitalist mode of production being dominant.

For Roberts, the main justification for describing China as “not capitalist” is the preponderance of state ownership. He refers to 102 key state enterprises worth about 7.5 trillion dollars. This includes oil companies, telecommunications, power utilities and weapons. Furthermore, the presence of CP officials as president of the board of directors of these companies means that the party controls a major part of the economy and will likely resist privatization, according to CP leader Xi Jinping whose speech at a 2016 conference sounded as if it was meant as a direct appeal to people like Michael Roberts, as reported by China.org:

China’s basic economic structure is at the core of its success; a position that Xi reaffirmed. “The mainstay status of public ownership and the leading role of the state-owned economy must not waver.”

Yet, it is precisely this that Western economists and advisors have identified as the main problem in China throughout the last 30 years. They maintain that free markets and private property must play the leading role. However, it is quite clear Xi is right on this, and the pro-capitalists are wrong. This holds important lessons for left-wing forces internationally.

The driving force of capitalism — the pursuit of profit — does not dominate China’s economy. Instead, it is the needs of economic development and the process of planned urbanization. However, the complexities, difficulties and advantages of an economy led by public ownership and state-owned enterprises, are rarely studied in the West from a positive standpoint.

Nevertheless, there are highly competent Marxist economists and thinkers in the West, and a large layer of critically-minded social scientists and brilliant creative minds in the humanities and arts. If they are given the chance, they will be more than happy to help to foster new forms of urban life and workplace democracy in China.

China has become a sort of laboratory of socio-economic formations. This embrace of experimentation can offer dramatic insights capable of confirming or refuting various economic theories. For example, in the 1980s, the emergence of township village enterprises with “fuzzy” and unclear property rights was interpreted by economists like Joseph Stiglitz as evidence refuting the theory that economic dynamism must be based on private ownership.

Similarly, if we can discover why China grew by 7 percent after 2008, at a time when the world economy was in crisis, then there is a very strong chance that this will reveal how socialist economics can surpass the dynamics towards capitalist economic crisis everywhere.

If you search Roberts’s blog for references to “state ownership”, you’ll note a significantly more critical stance when it is applied to a country not ruled by a Communist Party leader who urges his ranks to read Karl Marx. In a 2012 article titled “Irresponsible capitalism” that looks at developments in the British financial sector, you see Roberts disgusted with British state-owned banks that are no different than Goldman-Sachs as a means of further enriching the one percent:

It’s the same story with the large UK banks that are now state-owned. The 83% taxpayer-owned RBS is set to pay its chief executive Stephen Hester a bonus of £1m on top of his £1.2m salary, while the man who brought RBS to its knees, the former chief executive, Sir Reg Goodwin (knighted for his services to the banking community) is still set to pick up his huge pension entitlements (£700,000-plus a year).

Unfortunately, the same due diligence does not apply when it comes to looking under the cover of Chinese SOE’s.

Let’s take a look at one of them, the Anbang Insurance Group that attracted a lot of publicity this year for its bid to invest millions of dollars in a building owned by Jared Kushner. The largest shareholders are state-owned car maker Shanghai Automotive Industries Corp and Sinopec, a state-owned oil company Sinopec.

Of course, trying to figure out who exactly “owns” Anbang is not easy. Like many huge Chinese firms, they make discovery difficult as an American trade union found out when pressing charges against it for unfair labor practices as the Times reported in September 2016.

The Anbang shareholders in the Pingyang County area hold their stakes through a byzantine collection of holding companies. But according to dozens of interviews and a review of thousands of pages of Anbang filings by The New York Times, many of them have something in common: They are family members and acquaintances of Wu Xiaohui, Anbang’s chairman, a native of the county who married into the family of Deng Xiaoping, China’s paramount leader in the 1980s and ’90s.

You remember who Deng Xiaoping was, right? He was Mao Zedong’s successor who took “the capitalist road” in the first place. I guess his friends and relatives were quite happy with the NEP-type reforms since it put them in the position of buying the Waldorf Astoria and coming close to bailing out Trump’s son-in-law who will hopefully be arrested this week.

As should be obvious at this point, “state ownership” is a convenient fiction in China, especially since anybody can buy shares in such companies, including Western investors. For example, Roberts is impressed with the fact that the state-owned China General Nuclear Power Corp has begun to incorporate Western technologies, However, it is traded publicly on the Hong Kong Stock Exchange, as is the case with the largest Chinese SOE’s, and thus no different from any other capitalist firm. In the final analysis, it is the class character of those who own the means of production that determines their social role. While the number of shares available to outside investors has been relatively small, “reforms” enacted in 2015 to transform SOE’s into mixed enterprises will likely increase their numbers as indicated by the transformation of the second largest mobile carrier.

Unlike China today, Soviet Russia never had a stock exchange. The children of Soviet bureaucrats could never look forward to inheriting their daddy’s holdings like Donald Trump did from his father. That is true state ownership.

Although ownership data is difficult to come by, you can read an article co-authored by Curtis J. Milhaupt and Wentong Zheng titled “Beyond Ownership: State Capitalism and the Chinese Firm” on the Columbia University Law School website. It hones in on Ping An, another insurance company. The largest block of shares is owned by HSBC Ltd., a multinational bank that originated in Hong Kong even though most shares are owned by other SOE’s. In 2016, Mexican families sued the bank for money-laundering the drug proceeds of the Sinaloa Cartel that had killed members of their families, just the sort of outfit you’d want to help overcome the law of value, as Roberts put it.

Milhaupt and Zheng refer to the “blurred boundaries” between private and state-owned firms in China, as I have tried to establish. To get an idea of how tangled things can get, this is how they describe ZTE, China’s second-largest telecom:

According to the website of ZTE Holdings, it is one of the “national key SOEs” designated by the State Council. The third shareholder of ZTE Holdings, Zhongxing WXT (also known as Zhongxingweixiantong), is a private firm owned by a group of individuals, of whom the founder, Hou Weigui, holds the largest percentage (18%). According to the website of ZTE Holdings, it was the first firm in China to adopt a “state owned, privately managed” model in 1993. Under this so-called “ZTE model,” the majority state shareholders contractually authorize the minority private shareholders to assume sole responsibility for managing the firm, subject only to the requirement that the state shareholders be guaranteed a minimum rate of return. Under the ZTE model, therefore, a firm is an SOE from the standpoint of ownership, but a POE [privately owned] from the standpoint of management.

It is best to think of SOE’s in China as a chainlink in the transition to capitalism. Given the constant references to “building socialism” in the Chinese press and the nation’s origins in a powerful revolution led by the Chinese Communist Party that is still in the driver’s seat, it is understandable why some might still believe that Xi Jinping is a new Mao Zedong rather than a pioneer in the construction of capitalism.

If you put China in the context of the origins of capitalism in Europe in the 17th and 18th century, the role of SOE’s might be seen as analogous to the state monopolies that flourished under what Marx called mercantile capitalism. In 1773, the Crown took control of the East India Company and used it as a means of expanding the empire in East Asia, a key element of primitive accumulation.

Another tool of primitive accumulation was separating the peasant from his means of subsistence through the Enclosure Acts around the same time, thus making it possible for a reserve army of the unemployed to be transformed into wage slaves.

Hasn’t China had its own version of the Enclosure Acts? That’s the argument made by Richard Walker and Daniel Buck in a July-August 2007 NLR article titled “The Chinese Road” (behind a paywall, contact me for a copy). They refer to the hukou, a Mao-era law that established household registration. If you migrated to the city in search of work, you might be considered in violation of the hukou and as such not entitled to the same rights as other citizens, thus making you vulnerable to super-exploitation. Walker and Buck write:

The harshness of the hukou system recalls Britain’s Speenhamland laws. Rural migrants must pay for the right to move and are prevented from becoming rightful members of urban society; they ‘float’ through the cities, poorly housed and lacking social services. The hukou is a pernicious method of discriminating among classes of people and keeping the floating population marginalized. It functions to maintain a low-wage labour force, reduce the demand for urban infrastructure such as schools, and facilitate rapid capital accumulation. In Beijing, reforms since 1997 have at least allowed purchase of temporary residence, and today Chongqing is experimenting with dismantling the hukou altogether, allowing people to acquire permanent residence in the city in exchange for relinquishing land rights in the countryside.

Like Britain, China is “taking off” in its own version of the Industrial Revolution made possible by such harsh measures. In the same way that becoming a major exporter of textiles in the 19th century helped Britain’s workers begin to enjoy a standard of living that was the envy of the rest of Europe, China’s workers appear content with the status quo, at least according to a Pew Research Center Poll that Roberts takes as a barometer of Chinese opinion. “No matter how you measure it, no matter what questions you ask, the results always indicate that the vast majority of people are truly satisfied with the status quo.”

Of course, it helps when you jail anybody foolish enough to complain about the status quo, especially those who would like to use the Internet to connect with like-minded citizens. Under the Great Firewall, a system intended to police thought, there are 3,000 websites that the Chinese cannot access. Here are some of the most notable according to Wikipedia.

 

 

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