We follow up our report last issue of the NZ/Hong Kong trade and investment deal with a statement of our position on capitalist restoration in China. We recognise that when the 14th Party Congress voted to introduce ‘market socialism’ in 1992 this put the revival of the market and the profit motive on th3e agenda. However the intention to restore capitalism is not the same as doing so. In fact it has taken another ten years to overcome the plan and re-introduce the law of value as the determining influence on the economy. Today we can say that joining the WTO has completed the process of restoration to the point where the market now dominates the plan. The class nature of the Chinese state is now capitalist.

When in 1991 the Soviet Union succumbed to 75 years of bourgeois encirclement and bureaucratic mismanagement, the attempt by the Yananev ‘hardline’ coup plotters to kidnap Gorbachev gave Boris Yeltsin the pretext he needed to seize power and fast-forward the ‘shock treatment’ restoration process. Both Yeltsin and Yananev were restorationists, but Yananev and Co wanted to avoid the breakup of the SU and keep the Communist Party in power overseeing a ‘slow track’ transition to capitalism so their clique could become the new bourgeoisie.

The defeat of their botched plot allowed Yeltsin to eliminate his rivals, begin the breakup of the SU and ban the CP. Within a year Yeltsin had implemented World Bank plans to demolish the workers’ plan, privatise key sectors of the economy and to open up Russia to foreign investment and trade. Between the seizure of power and the restoration of capitalism less than a year had elapsed.

In China that same year, 1992, the 14th Party Congress took the decisive turn towards ‘market socialism’. In China there was no major section of the bureaucracy pushing for a fast track restoration. The plan would be phased out over the next decade as the economy was progressively freed up to capital investment.

By taking the ‘slow track’ to restoration the ruling party hoped that it could convert itself into the new national bourgeoisie without a Soviet-type social upheaval. But while the intention to restore capitalism clearly indicated that the bureaucracy was committed to restoring capitalism, it was insufficient to constitute a transformation in the class character of the state. The bureaucracy could not ‘will’ the market into existence overnight. It took another ten years before the bureaucracy could replace the plan with the market.

The point where a new class comes to power is easier to determine when a decisive revolutionary overturn occurs as in October 1917 in Russia, 1945 in Eastern Europe, or 1949 in China. Each of these overturns saw a new class take power by force of arms. In each case the armed workers or the Red Army took state power. If the bourgeoisie was allowed to continue production for profit this was to accumulate capital for use in the transition to a socialist state.

In each case, the new workers state operated a form of ‘state capitalism’. But as Lenin explained, this was ‘capitalism’ dominated by a ‘workers state’. That is, the market was subordinated to the plan. Only when the bourgeoisie refused to cooperate or began to threaten counter-revolution, was ‘capitalist’ property eliminated. However, in Yugoslavia, as the capitalist world allowed a form of private ownership to persist indefinitely, elements of capitalist production for profit remained part of the workers’ state.

Just as a workers’ revolution can coexist with some ‘capitalist’ social relations such as the New Economic Policy in the SU in the 1920s, the route back to capitalist restoration will usually begin with ‘market reforms’ as the bureaucracy attempts to stimulate the planned economy and defend their privileges.

. What is fundamental is the essence of property relations as either production for profit or production for use. The class nature of the state is determined by the social relations it reproduces. Therefore the change in class rule is given by the state’s actual reproduction of social relations of production for profit or for use.

In a DWS the turnover from a degenerate workers’ state into a restored capitalist state involves the transformation of the bureaucracy from a parasitic caste into a new class. As a caste the bureaucracy has usurped workers power and rules the state in order to preserve workers property as long as it can derive privileges from it.

But once the plan ceases to generate privileges the bureaucracy is forced to convert itself into a bourgeoisie. But if cannot do this by wishful thinking. It does not become a new bourgeoisie until it has destroyed the dominance of the plan and substituted the law of value. Thus the conversion of the bureaucracy into a bourgeois class comes only when it has been successful in restoring the dominance of the market.

In China, therefore, the change in the class nature of the state could only occur at the point where the state successfully introduced the law of value to re-value planned production in terms of market value. It took the Chinese bureaucracy a decade from 1992 to act on its intention to overturn planned production for use and restore capitalist production for profit.

. The decisive point of the turnover is the penetration of the law of value to the extent that ‘value’ is no longer determined by ‘use-value’ but by international ‘exchange-value’. In our view this became the reality when China joined the WTO agreeing to abide by its rules of free trade and investment.

For a Socialist Revolution in China!
Defend China against Imperialism!

Class Struggle No 40 August-September 2001

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