Abstract

Ever since the 'Reform and Opening Up' era commenced in the People's Republic of China, many scholars have questioned whether Marxism is still a guiding principle of the Communist Party of China. The period has coincided with increased trade with the western world, privatization of state-owned enterprises, and overall de-centralization of the economy. In opposition to many socialist and Marxist scholars, this paper provides an argument that Communist Party of China can still be considered Marxist because of their adherence to dialectical and historical materialism. Moreover, this paper also attempts to re-conceptualize the macroeconomic development of China using historical and dialectical materialism.

Introduction

“ Liberation is a historical and not a mental act, and it is brought about by historical conditions, the development of industry, commerce, agriculture, and the conditions of intercourse.” - Karl Marx, The German Ideology

China under Communist Party of China (CPC) rule remains an enigma to many in the Western world, particularly the US. Many scholars and analysts have had lively discussions about how to characterize the political economy of modern-day China. During the Mao era, it was relatively easy to characterize China as a communist society because it had greatly mirrored the Stalinist political economy of the USSR. The state had control of almost all the enterprises within the country and each enterprise had fixed budgets and investments by a state plan. Moreover, peasants had been consolidated into huge agricultural collectives to increase production.

However, after Zedong passed away in 1976 and as the Gang of Four’s power was receding, there became a new strain of Chinese socialist thought. Deng Xiaoping, who ascended to become the paramount leader of the PRC in 1978, was the face of this new thought. Deng instituted market and agricultural reforms that many scholars believed were a reversion back to capitalist relations of production. Some even go as far as to say capitalism has been restored. In fact, the famous American Marxist scholar David Harvey in his book, A Brief History of Neoliberalism, placed a picture of Deng Xiaoping on the cover.[1] Moreover, Harvey wrote a chapter in the book entitled “Neoliberalism with Chinese Characteristics”, a play on the term “Socialism with Chinese Characteristics”, which entered common usage during the Deng Xiaoping era. In addition to Harvey, the famous Slovenian philosopher Slavoj Zizek insisted that China was actually creating a more efficient capitalist political economy than what the West was doing.[2] And interestingly enough, many historians and analysts associated with the left and right wing have converged to agreement on the nature of China’s political economy.

But several questions still remain. If China has abandoned Marxism not only as a mode of thinking, but also as a method of building up their economy, then why does the government continue to promote Marxism within the public sphere? Moreover, the CPC gives their economic system “Socialism with Chinese Characteristics”, indicating that they still believe in the Marxist path. In an article penned for the Chinese political journal Quishi, Xi Jinping, the paramount leader of China, wrote “The foundation of China’s political economy can only be a Marxist political economy, and not be based on other economic theories.”[3]

Some analysts may say that the existence of Marxist aesthetics in China is a mere prop to help the Communist Party maintain its legitimacy within the Chinese mainland. The CPC came to power by promising Communism to the urban proletariat and the rural peasants. If it admitted to being a capitalist party, then how could it sustain its sovereign rule amongst the betrayed masses?

While certain aspects of the Chinese economy suggest that it’s undergoing capitalist social development, in this piece I will argue that the People’s Republic of China is currently pursuing a development path that can be considered consistent with Marxist modes of thought.

Introduction to Dialectical Materialism and Historical Materialism

For the purposes of this paper, it will be useful to draw out some basic conceptions of dialectical materialism and historical materialism respectively.

First, I define dialectical materialism to be a method of thought which interprets history and political events as a result of conflict due to material needs. For example, the transition from feudalism to capitalism in Europe was mediated by the material tension between capitalists and landowners. According to British philosopher Maurice Cornforth, “Feudal ownership, feudal dues, and restrictions on trade hampered the development of agriculture and manufacture employing new inventions that demanded a source of wage-labor.”[4] This conflict gave way to the socio-political formation of capitalist society.  Other important aspects of the dialectical materialist outlook include the ideas that processes are in motion[5] at all times and that things cannot be considered in isolation, but are actually interconnected.[6]

Second, I define historical materialism to be a theory which argues that contradictions, or social oppositions, between the forces of production and the relations of production lead to the replacement of the current mode of production to a higher stage of economic and social development.[7] Historical materialism also advances the idea that when the productive forces have advanced and the current relations of production fetter their use or further development of the productive forces, then new relations of production must come.[8] Oftentimes, historical materialism is portrayed as a stadial model, where societies pass through various modes of production. The stadial model used by some Marxists, believes that human societies progressed from primitive communism to class-based societies like feudalism and capitalism and then finally to socialism.[9]

Both dialectical materialism and historical materialism have other facets that will be used when relevant in the ensuing arguments in this essay. Moreover, it’s important to note that Marx believed that the transition from capitalism to socialism would occur in Western European countries that already had advanced forces of production. However, subsequent Marxist thinkers were able to conceptualize why this was not the case, and their contributions changed historical materialism from a rigid stadial model to a dynamic model of economic development.

Redefinition of Socialism

While the above sections go over how a socialist system affects the market economy, it’s also important to re-conceptualize what socialism signifies. Many westerners associate socialism with the bureaucratic collectivism of the Soviet Union during the mid-20th century. Socialism is many times associated with full state control over the economy, with private property having little to no influence.

However, formerly underdeveloped  countries like China often did not have the productive forces that Marx imagined to jump straight to socialism. In many places, labor had not become socialized, and there didn’t exist a full contradiction between the bourgeoisie and the proletariat in many locales. Keeping in mind that different socio-spatial areas are in different periods in their modes of production, I propose that it’s better to consider a government’s compatibility with Marxism as one that attempts to resolve contradictions in the material base as they arise over time. Theoretically, if a ruling party attempts to align with this definition over time, they will eventually reach a point where the means of production are all collectively owned by the people and there will be no capitalist social relations. But it also allows countries to move through the necessary stages of development that historical materialists have proposed without being considered revisionist. Next, I will show how Deng Xiaoping’s identification of the primary contradiction in Chinese society allows us to see how the CPC’s current political economy aligns with Marxist goals.

Primary Contradiction

In Mao Zedong’s seminal work on dialectical materialist philosophy, On Contradiction, Zedong discusses what he calls “The Principal Contradiction and the Principal Aspect of Contradiction”. Mao remarks that “ …there is no doubt at all that at every stage in the development of a process, there is only one contradiction which plays a leading role.”[10] Contradiction, in this context means an opposition of social forces.

Mao also comments that analyzing the primary contradiction involves analyzing the class structure and material conditions of a respective society.[11] As an example, Mao analyzes China’s class structure under Western and Japanese imperialism, and concludes that the primary contradiction in Chinese society is imperialist capitalism, which has enabled secondary contradictions such as those between feudal landlords and tenants[12]. 

In the post-Mao era, when Deng Xiaoping had ascended as paramount leader, the class structure of society had changed. The workers and peasants already had a worker’s revolution, and seized the state apparatus. However, the low level of technology and outdated management techniques limited productivity, which made it harder to satisfy the peoples’ want for greater material well-being.  In his speech entitled To Build Socialism We Must First Develop the Productive Forces, Xiaoping states “in order to build socialism we must first of all develop the productive forces.”[13] In addition, Xiaoping states in the speech “All revolution is designed to remove obstacles to the development of the productive forces.[14]” Xiaoping’s words indicate that China’s primary contradiction shifted from class struggle to that between the low level of productive forces (non-labour factors that go into production) and the material well-being of the masses. Identifying this as the primary contradiction will assist in understanding China’s development path.

Can Markets coexist with Socialism?

Since Opening Up and Reform occurred in 1978, many Chinese scholars have attempted to theoretically divorce market economies from capitalism. In 1979, Deng Xiaoping said, “It is wrong to maintain that a market economy exists only under capitalism. Why can’t we develop a market economy under socialism? Developing a market economy does not mean practicing capitalism… We cannot say a market economy exists only under capitalism. Market economy was in its embryonic stages as early as feudalism. We can surely develop it under socialism.”[15]

Huang Nansen, a Chinese scholar, has made the distinction between an institutional form and a system. In the case of China, an institutional form would be the market while the system would be socialism. According to Nansen, the form and system in turn form a dialectical relationship, which mutually influence one another[16].

Moreover, at times the market can stand in contradiction with the prevailing economic system, but at other times it can accommodate the current system, at least temporarily. Examples of this remain abound throughout history.

For example, in Russia, Lenin believed that the Tsarist regime and feudal elements of Russian society were partnering with the bourgeois to maintain its power.[17] In fact, the bourgeoisie were becoming landowners and the landowners were also becoming part of the capitalist class.[18] Mao Zedong corroborated a similar story  to Lenin in China. In his work, The Chinese Revolution and The Chinese Society, Mao concluded that China was a “semi-feudal and semi-colonial” nation.[19] This is because while China’s “natural (commodity) economy of feudal times” has been destroyed by imperialism, the exploitation of the landlord class by the peasantry remained.[20] Mao also noted that imperial capitalists operated light and heavy industries in China, and they also partnered with the landlord class to maintain their rule.[21]

From here, a natural question is to ask how the market has influenced China’s socialist system, and how China’s socialist system has influenced the market. To fully comprehend this dialectical relationship, it’s necessary to understand the primary opposition of social forces in Chinese society and how this can create secondary oppositions.

What is a Socialist Market Economy?

When Deng Xiaoping took over China in 1978, the PRC was still in destitute poverty after the Mao years. Its GDP per capita was lower than third world countries like India, and initiatives like the Great Leap Forward and Cultural Revolution had not produced desired results. Even after the Chinese revolution had been won, Mao still believed that class struggle was the primary contradiction within Chinese society, and he tried to institute superstructural changes to promote a “pro-working class ideology”, which would help consolidate socialism. Some of these ideological changes included ridding the masses of Confucian ideology. Many ultra-leftists throughout the country decried it as a feudal remnant that must be abolished, and that its goal was to preserve the feudalist and capitalist rule.[22]

The planned economy that had taken hold during the Mao years stagnated over time, as the lack of incentives and production inefficiency in state-owned enterprises acted as a fetter to total production output. Fixed plans and funding punished productive firms and rewarded inefficiency.

During the Deng era, China implemented economic reforms in agriculture and industry that many scholars interpreted as a return to capitalist relations of production. Reform in agriculture included the household responsibility system, which made individual peasant households responsible for their own profits and losses. Within industry, incentives to attract foreign capitalist firms were introduced. State-owned enterprises acted more independently, taking greater responsibilities for profits and losses along with independent management. Over-time, SOEs also received more mixed ownership reform, which gives private ownership more equity in particular SOEs. These developments led many to believe CPC leadership was embracing the capitalist path.

However, market incentives in the economy can assist with increasing productive forces, as the surplus value extracted from workers must be re-invested in capital in order for firms to survive in market sectors. But, returning to the dialectic, socialism also shapes markets in a way that’s different from capitalism.

Role of State-Owned Enterprises

Capitalist societies attempt to protect the ability of the bourgeoisie to extract surplus value and other forms of rent from the working and middle class, even when this extraction fetters the utilization and development of the productive forces. In China, state-owned enterprises assist in removing these fetters by raising investments during downturns and thus increasing aggregate demand and carrying out technological innovations in riskier sectors.

Marxian crisis theory stipulates that economic downturns occur due to the tendency of the rate of profit to fall as capital investment increases, as the rate of surplus value extracted becomes smaller over time. However, according to economics professors Hao Qi and David M. Kotz, SOE investment has been more stable than private investment, and has played a critical role in maintaining aggregate demand and thus stabilizing downturns[23]. Additionally, this means the productive forces can still be used to a greater extent in down cycles than they would under capitalism.

Qi and Kotz also conclude that SOEs provide a better environment for promoting technological progress[24]. In an environment with intensified competition, private firms tend to focus on peripheral innovations that attempt to lower costs. According to Chinese economist Enfu Cheng, market forces often work to allocate resources in the short term, but cannot always be trusted for long-term allocation[25]. SOEs are able to provide a non-competitive environment that allows for long-term considerations in investing[26].

In summary, China and other socialist market economies utilize major levers of the economy like state-owned enterprises to liberate the productive forces to a greater extent than in capitalist economies.

Labor and Wages

In his document Critique of a Gotha Programme, Karl Marx famously writes that distribution in socialist society will be “from each according to his ability, to each according to his work.” Because of China’s large economic growth the past 40 years, it should be expected that wages and standards of living, even for the poorest, should be rising if it’s following the socialist path. While there’s been bumps and bruises along the way, the growth of the economy has certainly trickled down to the masses.  First, poverty alleviation programs attempting to eradicate extreme poverty have been a great success. The World Bank estimates that 800 million people in China have been lifted out of extreme poverty[27]. Additionally China’s standard for extreme poverty is substantially higher than the World Bank’s, as adequate access to food, clothing, medical services, drinking water, and electricity is required for a person to be considered to have left extreme poverty[28]. Additionally, the ‘Common Prosperity’ campaign, pushed by Xi Jinping, has created legislation that has increased purchasing power for workers. This includes rent caps in cities[29], increases in rent-subsidized housing, and greater donations and social investments from tech giants rooted in the country[30].  Additionally, pay for high income groups like investment bankers and state-owned enterprise managers has been slashed, with the money likely being put to use in other ways[31].

The proportional increase in wages from output is different from the way capitalist economies operate according to Marx. In the first volume of Das Kapital, Marx suggests that there’s an inverse relationship between capital accumulation and relative wages. This is because an increase in fixed capital will necessitate less proportional variable capital (labor). Additionally, in order to temporarily “fix” the falling rate of profit, the capitalists will increase the amount of surplus value they gain, which will in turn immiserate the working class even more.

While more work needs to be done to fix the wealth inequality in the country, which is higher than many capitalist countries,  the ‘Common Prosperity’ campaign has only been in place for a year and has achieved significant reforms within the country, and looks like it will do more going forward.

Conclusion

The mutual existence of large private businesses coinciding along with communist symbolisms in China certainly raises questions to many outsiders. The first section of the paper attempts to give the readers some background information on core Marxist ideologies like dialectical and historical materialism. The next section attempts to redefine what constitutes a socialist government using dialectical materialist principles. The paper then discusses the primary contradiction in Chinese society, and whether markets can be used in a socialist economy. After going through an overview of the market reforms China has conducted, I examine how the socialist character of the Chinese economy affects its market, making it markedly different from a capitalist market economy.  From this, we can conclude that it is at least plausible that the CPC is still following a Marxist model of governance.

Previous scholars have made limited use of dialectical and historical materialism to evaluate China’s economic system, instead attempting to understand the economy in a static, metaphysical way that prevents people from seeing its social development across time. This method allows us to see how the government is increasing their productive forces and thus helping the country move toward communism.

However, it remains to be seen how the CPC will deal with the emerging contradictions between the national bourgeoisie and the proletariat, the foreign capitalists and the national bourgeoisie, and the foreign capitalists and the proletariat. After the United States, China has the second most billionaires in the world, suggesting that these contradictions have intensified quite a bit. How they handle these contradictions in the upcoming years will determine if they continue down the socialist path or if capitalism will be restored like in the former USSR.

Kaushik Sampath is an undergraduate student at Stanford University and currently is a desk editor for the school newspaper, The Stanford Daily. He is planning to major in Computer Science and Chemistry. 

Works Cited

Cornforth, Maurice. Materialism and the Dialectical Method. 4th edition. New York, International Publishers, 1953.

Cornforth, Maurice. Historical Materialism. 1st edition. New York, International Publishers, 1954.

Cheng, Enfu. “On the Three Stages in the Development of Socialism”, Science and Society, no. 86 (2022), 168.

Harvey, David. A Brief History of Neoliberalism. 1st edition. Oxford, Oxford Press, 2005.

James Gregor, A. and Maria Hsia Chang, “Anti-Confucianism: Mao’s Last Campaign.” Asian Survey 19, no. 11, (Nov. 1979): 1073-1092. https://www.jstor.org/stable/2643955#metadata_info_tab_contents

Li, Selena. “China’s ‘common prosperity’ drive slashes pay and perks for investment bankers.” Reuters. July 28, 2022 https://www.reuters.com/world/china/chinas-common-prosperity-drive-slashes-pay-perks-investment-bankers-2022-07-29/.

Lifting 800 Million People out of Poverty- New Report Looks at Lessons from China’s Experience,” World Bank. April 1, 2022, https://www.worldbank.org/en/news/press-release/2022/04/01/lifting-800-million-people-out-of-poverty-new-report-looks-at-lessons-from-china-s-experience.

Martinez, Carlos. “How to Eradicate Extreme Poverty,” Beijing Review. September 10th, 2021. http://www.cnfocus.com/how-to-eradicate-extreme-poverty/

Qi, Hao and David M. Kotz. “The Impact of State-Owned Enterprises on China’s Economic Growth.” Review of Radical Political Economics 52 (2019): 114 - 96.

Woo, Ryan.  “China moves to cap the cost of renting a home in cities.” Reuters. August 31, 2021. https://www.reuters.com/world/china/china-moves-cap-cost-renting-home-cities-2021-09-01/

Deng Xiaoping, “To Build Socialism We Must First Develop the Productive Forces,”, Marxists, https://www.marxists.org/reference/archive/deng-xiaoping/1980/101.htm

Xiaoping, Deng.  “We Can Develop a Market Economy Under Socialism”, Marxists. https://www.marxists.org/reference/archive/deng-xiaoping/1979/152.html

Yeung, Karen. “Chinese President Xi Jinping says Marxist political economy is the bedrock for the nation's growth.” South China Morning Post. August 16, 2020. https://www.scmp.com/economy/china-economy/article/3097561/chinese-president-xi-jinping-says-marxist-political-economy

Zhang, Jane. “Alibaba elaborates on how it will use its 100 billion yuan ‘common prosperity’ fund – pointing to ‘high quality growth’ for all.” South China Morning Post. September 10, 2021.

Zedong, Mao. On Contradiction. 1937. https://www.marxists.org/reference/archive/mao/selected-works/volume-1/mswv1_17.htm.

Zedong, Mao. The Chinese Revolution and the Chinese Society. 1939. https://www.marxists.org/reference/archive/mao/selected-works/volume-2/mswv2_23.html.

 Zizek, Slavoj. “Slavoj Zizek- Why China is the future of Capitalism.”, https://www.youtube.com/watch?v=_eFQsiLm-EE

[1] David Harvey, A Brief History of Neoliberalism, 1.

[2] Slavoj Zizek, “Slavoj Zizek- Why China is the future of Capitalism.”, https://www.youtube.com/watch?v=_eFQsiLm-EE

[3] Karen Yeung, “Chinese President Xi Jinping says Marxist political economy is the bedrock for the nation's growth.” South China Morning Post. August 16, 2020. https://www.scmp.com/economy/china-economy/article/3097561/chinese-president-xi-jinping-says-marxist-political-economy

[4]

[5] Maurice Cornforth, Materialism and the Dialectical Method, 47, https://www.marxists.org/archive/cornforth/1953/materialism-and-dialectical-method.pdf.

[6]  Ibid, 71.

[7] Maurice Cornforth, Historical Materialism, 61.

[8] Ibid.

[9] Ibid, 40.

[10] Mao Zedong, On Contradiction, https://www.marxists.org/reference/archive/mao/selected-works/volume-1/mswv1_17.htm.

[11] Ibid.

[12] Ibid.

[13] Deng Xiaoping, “To Build Socialism We Must First Develop the Productive Forces,”, Marxists, https://www.marxists.org/reference/archive/deng-xiaoping/1980/101.htm

[14] Ibid.

[15] Deng Xiaoping, “We Can Develop a Market Economy Under Socialism”, Marxists. https://www.marxists.org/reference/archive/deng-xiaoping/1979/152.html

[16] Roland Boer, Socialism with Chinese Characteristics, 124.

[17] Ibid, 503.

[18] Ibid, 503.

[19] Mao Zedong, The Chinese Revolution and the Chinese Society, https://www.marxists.org/reference/archive/mao/selected-works/volume-2/mswv2_23.htm.

[20] Ibid.

[21] Ibid.

[22]A. James Gregor and Maria Hsia Chang, “Anti-Confucianism: Mao’s Last Campaign.” Asian Survey 19, no. 11, 1075-1076

[23] Hao Qi and David Kotz, “The Impact of State-Owned Enterprises on China’s Economic Growth”, Review of Radical Political Economics, 99.

[24] Ibid, 103.

[25] Enfu Cheng, “On the Three Stages in the Development of Socialism”, Science and Society, no. 86 (2022), 168.

[26] Hao Qi and David Kotz, “The Impact of State-Owned Enterprises on China’s Economic Growth”, Review of Radical Political Economics, 104.

[27] “Lifting 800 Million People out of Poverty- New Report Looks at Lessons from China’s Experience,” World Bank. April 1, 2022, https://www.worldbank.org/en/news/press-release/2022/04/01/lifting-800-million-people-out-of-poverty-new-report-looks-at-lessons-from-china-s-experience.

[28] Carlos Martinez, “How to Eradicate Extreme Poverty,” Beijing Review. September 10, 2021. http://www.cnfocus.com/how-to-eradicate-extreme-poverty/

[29] Ryan Woo, “China moves to cap the cost of renting a home in cities,” Reuters. August 31, 2021. https://www.reuters.com/world/china/china-moves-cap-cost-renting-home-cities-2021-09-01/

[30] Jane Zhang, “Alibaba elaborates on how it will use its 100 billion yuan ‘common prosperity’ fund- pointing to high quality growth for all,“ South China Morning Post. September 10, 2021. https://www.scmp.com/tech/big-tech/article/3148334/alibaba-elaborates-how-it-will-use-its-100-billion-yuan-common

[31] Selena Li, “China’s ‘common prosperity’ drive slashes pay and perks for investment bankers,” Reuters. July 28, 2022. https://www.reuters.com/world/china/chinas-common-prosperity-drive-slashes-pay-perks-investment-bankers-2022-07-29/.