Sunday, September 18, 2005

China: The Truimph of State Capitalism

If It walks like a duck, and quacks like a duck, it must be a duck


Anyone out there that still believes that China is a 'communist' nation please leave the room immediately what I am about to say will upset your whole ideological perspective.

Now if you are a right winger blinded by your post cold war reds under the beds paranoia, no matter what the facts are you will deny them. Instead you will see China's move into the world marketplace of capitalism as some sort of incideous conspiracy of the 13th Communist International.

If you are a die hard bolshevik tendency all unto yourself, like the Spartacus League or the Marxist Leninists, you will see China as a truimph of Stalinism, and so called socialism in one state, which it is not.

Rather it is in transition from State Capitalism to Monopoly Capitalism,( ala Baran &Swezzy of Monthly Review). To misquote Lenin, though Bukharin would approve;

State Capitalism is the highest form of Monopoly Capitalism.

Being a very large shareholder in the state capitalist trust, the modern state is the highest and all-embracing organisational culmination of the latter. Hence its colossal, almost monstrous, power. N.I. Bukharin: Imperialism and World Economy Chapter XI

Thus the principles of class antagonisms reach a height that could not have been attained hitherto. Relations between classes become most clear, most lucid; the mythical conception of a "state elevated above classes" disappears from the peoples' consciousness, once the state becomes a direct entrepreneur and an organiser of production. Property relations, obscured by a number of intermediary links, now appear in their pristine nakedness.
N.I. Bukharin: Imperialism and World Economy Chapter XIV

State Capitalism emerged during the post War era and the Great Depression and continued after as an inevitable outgrowth of both a national and global expansion of post-WWII capitalist reconstruction, it is now mobilizing regional and national captials around monopolies. Whether they are American Transnational Corporations which are bound hand and foot to the American State by being part of the military industrial complex, or if it is large State funded corporations that are being privatized like those in China, it is still capitalism.

There is class struggle and class war, but there has never been a workers paradise. The fatal illusion of the Soviet Union and later the Chinese Revolution under Mao, is that they were some how socialist revolutions. The fact is that they were not working class revolutions at all since they were national revolutions. Socialism was the ideology but the practice was State Capitalism no different than its other manifetations, The New Deal in the U.S. and Facism in Italy, Spain, Germany, and Japan.

In the third world the attempted National Liberation Struggles either ended up a failure of capitalist developement, such as we are witnessing in the Congo or were successful in moving from a peasant economy to a proletarian economy, such as Lesotho and Angola, and of course South Afica.

The Marxist Leninist Gueveraist Third World struggles of the Sixties while ideologically were supposedly left wing, they in fact were needed for capitalism to develop a marketplace and a working class in these countries.

The role of the ML movement was to modernize their economies through National Liberation. No differently than previous National Liberation revolutions like the American, French and Haitian.

They existed to create a bourgoise revolution, to create a bourgoise class and a working class out of the peasant and colonial conditions they were burdened with.

China is now a full blown capitalist and Imperialist state, capable now of challenging the hegemony of the United States. With the successful launch of its first space flight, it has joined the great powers of Russia and the US.
While Russia is weakend a wounded bear suffering the indignities of privatization and criminal capitalism, China remains a solidly Monopoly Capitalist economy on where the reforms to its State Capitalist regime do not endanger it's national capitals and their monopolies.

Simply put you can't have a banking crisis in a workers paradise, cause the struggle against capitalism is about abolishing wage slavery. There are no banks in a workers paradise.

Bad debt sale delayed by ICBC loan bungle

The delay comes amid mounting evidence that the whole loan-disposal program is in disarray. The four AMCs were set up in 1999 to get rid of 1.4 trillion yuan of bad loans accumulated by the big four state-owned banks - Bank of China, Construction Bank, ICBC and Agricultural Bank. Yet they have managed so far to sell off a paltry US$6 billion (HK$46.8 billion) in bad debts - just 3 percent of the total - via open auctions to foreign and domestic bidders. The rest have merely been transferred between AMCs at inflated prices or sold off privately to domestic bidders for less than their true worth. Meanwhile China's banking system remains saddled with bad loans estimated at US$300 billion.

Nikolai Bukharin

Imperialism and World Economy

Introduction by V.I. Lenin

Written: 1915 and 1917
Source: Nikolai Bukharin "Imperialism and World Economy", Monthly Review Press, no date
First Published in English: Nikolai Bukharin "Imperialism and World Economy", International Publishers 1929
Online Version: Marxists Internet Archive ( 2001
Transcription/Markup: Mathias Bismo

N.I. Bukharin: Imperialism and World Economy Chapter III

It is a profound error to think, as the bourgeois economists do, that the elimination of free competition and its replacement by capitalist monopolies would do away with industrial crises. Such economists forget one "trifle," namely, that the economic activities of a "national" economy are now conducted with a view towards world economy. As to the latter, it is by no means an arithmetical total of "national" economies, just as a "national" economy is by no means an arithmetical total of individual economies within the boundaries of the state territory. In either case, there is a very substantial element supplementing all the others, namely, connections, reciprocal action, a specific medium which Rodbertus called "economic communication," without which there is no "real entity," no "system," no social economy, only isolated economic units. This is why, even if free competition were entirely eliminated within the boundaries of "national economies," crises would still continue, as there would remain the anarchically established connections between the "national" bodies, i. e., there would still remain the anarchic structure of world economy.)

The perspectives of development can be pointed out only after analysing all the main tendencies of capitalism. And since the internationalisation of capitalist interests expresses only one side of the internationalisation of economic life, it is necessary to review also its other side, namely, that process of the nationalisation of capitalist interests which most strikingly expresses the anarchy of capitalist competition within the boundaries of world economy, a process that leads to the greatest convulsions and catastrophes, to the greatest waste of human energy, and most forcefully raises the problem of establishing new forms of social life."

N.I. Bukharin: Imperialism and World Economy Chapter IV

World economy, as we have seen above, represents a complex network of economic connections of the most diverse nature; the basis of this are production relations on a world scale. Economic connections uniting a great number of individual economies are found to become more numerous and more frequent as we proceed, within the framework of world economy, to analyse "national" economies, i.e., economic connections existing within the boundaries of individual states. There is nothing mysterious about this; we must not attribute that fact to an alleged creative role of the "state principle" that is supposed to create from within itself special forms of national economic existence; neither is there a predestined harmony between society and state. The matter has a much simpler explanation. The fact is that the very foundation of modern states as definite political entities was caused by economic needs and requirements. The state grew on the economic foundation; it was only an expression of economic connections; state ties appeared only as an expression of economic ties. Like all living forms, "national economy" was, and is, engaged in a continuous process of internal regeneration; molecular movements going on parallel with the growth of productive forces, were continually changing the position of individual "national" economic bodies in their relation to each other, i.e., they influenced the interrelations of the individual parts of the growing world economy. Our time produces highly significant relations. The destruction, from top to bottom, of old, conservative, economic forms that was begun with the initial stages of capitalism, has triumphed all along the line. At the same time, however, this "organic" elimination of weak competitors inside the framework of "national economies" (the ruin of artisanship, the disappearance of intermediary forms, the growth of large‑scale production, etc.) is now being superseded by the "critical" period of a sharpening struggle among stupendous opponents on the world market. The causes of this phenomenon must be sought first of all in the internal changes that have taken place in the structure of "national capitalisms," causing a revolution in their mutual relations.

Those changes appear, first of all, as the formation and the unusually rapid spread of capitalist monopoly organisations: cartels, syndicates, trusts, bank syndicates. We have seen above how strong this process is in the international sphere. It is immeasurably greater within the framework of "national economies." As we shall see below, the "national" carteling of industry serves as one of the most potent factors making for the national interdependence of capital.

We have seen in the preceding chapters what tremendous significance is attached to participation in and financing of industrial enterprises. The latter is one of the functions of modern banks.

An increasingly large section of industrial capital does not belong to the industrialists who apply it. The right to manipulate the capital is obtained by them only through the bank which, in relaiton to them, appears as the owner of that capital. On the other hand, the bank is compelled to place an ever growing part of its capital in industry. In this way the bank becomes to an ever increasing degree an industrial capitalist. Bank capital, i.e., capital in money form, which has thus been in reality transformed into industrial capital, I call finance capital.

Thus by means of various forms of credit, by owning stocks and bonds, and by directly promoting enterprises, banking capital appears in the role of an organiser of industry. This organisation of the combined production of a whole country is the stronger, the greater; on the one hand, the concentration of industry, on the other, the concentration of banking.

Mention must be made here also of the important part played by state and communal enterprises, which enter into the general system of "national economy." Among state enterprises we find, first of all, mining (in Germany, e.g., out of 309 coal mines with an output of 149 million tons, 27 mines with an output of 20.5 million tons belonged to the state in agog; the total value of state production amounted to 235 million marks; salt mines and others also belong to this category; the gross income from all state enterprises of Germany in 1910 amounted to 349 million marks, while the net income was 25 million marks); next to mining are state railroads (only in England, and only prior to the war, were the railroads exclusively in the hands of private owners); then the post office, the telegraph, etc., also forestry. Among communal enterprises of great economical importance are mainly the water system, the gas system, and the electric constructions, with all their ramifications.The powerful state banks also form part of this system. The interrelation between those "public" enterprises and the enterprises of a purely private character assumes various forms; the economic connections, in general, are numerous and variegated, and credit is not the least among them. Very close relations arise on the basis of the so‑called mixed system (gemischte Unternehmungen) where a certain enterprise is composed of both "public" and private elements (participation of large‑scale, usually monopolistic, firms)‑a phenomenon not infrequent in the realm of communal economy. The example of the German Empire Bank (Reichsbank) is of particular interest. This bank, whose part in the economic life of Germany is tremendous, appears so closely connected with "private economy" that there is an unsettled dispute going on as to whether it is a stock company or a state institution, whether it is subject to the laws governing private or public undertakings.

All parts of this considerably organised system, cartels, banks, state enterprises, are in the process of growing together; the process is becoming ever faster with the growth of capitalist concentration; the formation of cartels and combines creates forthwith a community of interest among the financing banks; on the other hand, banks are interested in checking competition between enterprises financed by them; similarly, every understanding between the banks helps to tie together the industrial groups; state enterprises also become ever more dependent upon large‑scale financial‑industrial formations, and vice versa. Thus various spheres of the concentration and organisation process stimulate each other, creating a very strong tendency towards transforming the entire national economy into one gigantic combined enterprise under the tutelage of the financial kings and the capitalist state, an enterprise which monopolises the national market and forms the prerequisite for organised production on a higher noncapitalist level.

N.I. Bukharin: Imperialism and World Economy Chapter V

It is thus obvious that not the impossibility of doing business at home, but the race for higher rates of profit is the motive power of world capitalism. Even present-day "capitalist plethora" is no absolute limit. A lower rate of profit drives commodities and capital further and further from their "home." This process is going on simultaneously in various sections of world economy. The capitalists of various "national economies" clash here as competitors; and the more vigorous the expansion of the productive forces of world capitalism, the more intensive the growth of foreign trade, the sharper is the competitive struggle. During the last decades quantitative changes of such magnitude have taken place in this realm that the very quality of the phenomenon has assumed a new form.

Those changes proceed, so to speak, from two ends. On the one hand, the process of mass production is becoming extremely accelerated, i.e., the volume of commodities seeking for a foreign market is increasing-a phenomenon highly characteristic of recent times; on the other hand, the free market, i.e., that section of it which has not been seized by the "great power" monopolies, becomes ever narrower.

N.I. Bukharin: Imperialism and World Economy Chapter VII

Two sets of causes have been and are operating here. In the first place, the accumulation of capital proceeds with an unusually rapid tempo, due to large-scale capitalist production accompanied by incessant technical progress which makes gigantic strides and increases the productive power of labour, and to the unusual increase in the means of transportation and the perfection of means of circulation in general, which also hastens the turn-over of capital. The volumes of capital that seek employment have reached unheard of dimensions. On the other hand, the cartels and trusts, as the modern organisation of capital, tend to put certain limits to the employment of capital by fixing the volume of production. As to the non-trustified sections of industry, it becomes ever more unprofitable to invest capital in them. For monopoly organisations can overcome the tendency towards lowering the rate of profit by receiving monopoly superprofits at the expense of the non-trustified industries. Out of the surplus value created every year, one portion, that which has been created in the nontrustified branches of industry, is being transferred to the coowners of capitalist monopolies, whereas the share of the outsiders continually decreases. Thus the entire process drives capital beyond the frontiers of the country.

In the second place, high tariffs put tremendous obstacles in the way of commodities seeking to enter a foreign country. Mass production and mass overproduction make the growth of foreign trade necessary, but foreign trade meets with a barrier in the form of high tariffs. It is true that foreign trade keeps on developing, foreign sales grow, but this is taking place notwithstanding the difficulties and in spite of them. This does not mean, however, that the tariffs do not make themselves felt. Their influence is, first of all, expressed in the rate of profit. Tariff barriers, making the export of commodities very difficult, do not interfere in any way with the export of capital. Obviously, the higher the wave of duties, the larger, other conditions being equal, is the flight of capital from its home country.

N.I. Bukharin: Imperialism and World Economy Chapter VIII

To sum up: the development of the productive forces of world capitalism has made gigantic strides in the last decades. The upper hand in the competitive struggle has everywhere been gained by large-scale production; it has consolidated the "magnates of capital" into an ironclad organisation, which has taken possession of the entire economic life. State power has become the domain of a financial oligarchy; the latter manages production which is tied up by the banks into one knot. This process of the organisation of production has proceeded from below; it has fortified itself within the framework of modern states, which have become an exact expression of the interests of finance capital. Every one of the capitalistically advanced "national economies" has turned into some kind of a "national" trust. This process of the organisation of the economically advanced sections of world economy, on the other hand, has been accompanied by an extraordinary sharpening of their mutual competition. The overproduction of commodities, which is connected with the growth of large enterprises; the export policy of the cartels, and the narrowing of the sales markets in connection with the colonial and tariff policy of the capitalist powers; the growing disproportion between tremendously developed industry and backward agriculture; the gigantic growth of capital export and the economic subjugation of entire regions by "national" banking combinesall this has thrown into the sharpest possible relief the clash of interests between the "national" groups of capital. Those groups find their final argument in the force and power of the state organisation, first of all in its army and navy. A mighty state military power is the last trump in the struggle of the powers. The fighting force in the world market thus depends upon the power and consolidation of the "nation," upon its financial and military resources. A self-sufficient national state, and an economic unit limitlessly expending its great power until it becomes a world kingdom - a world-wide empire - such is the ideal built up by finance capital.

N.I. Bukharin: Imperialism and World Economy Chapter XI

When competition has finally reached its highest stage, when it has become competition between state capitalist trusts, then the use of state power, and the possibilities connected with it, begin to play a very large part. The state apparatus has always served as a tool in the hands of the ruling classes of its country, and it has always acted as their "defender and protector" in the world market; at no time, however, did it have the colossal importance that it has in the epoch of finance capital and imperialist politics. With the formation of state capitalist trusts, competition is being almost entirely shifted to foreign countries; obviously, the organs of the struggle that is to be waged abroad, primarily state power, must therefore grow tremendously. The significance for capitalism of high tariffs, which increase the fighting capacity of the state capitalist trust in the world market, must increase still more; the various forms of "protecting national industry" become more pronounced; state orders are placed only with "national" firms; income is guaranteed to all sorts of enterprises, which present great risks but are "useful" from a social point of view; the activities of "foreigners" are hampered in various ways. (Compare, for instance, the stock exchange policy of the French government as mentioned in Chapter II). Whenever a question arises about changing commercial treaties, the state power of the contracting groups of capitalists appears on .the scene, and the mutual relations of those states-reduced in the final analysis to the relations between their military forces-determine the treaty. When a loan is to be granted to one or the other country, the government, basing itself on military power, secures the highest possible rate of interest for its nationals, guarantees obligatory orders, stipulates concessions, struggles against foreign competitors. When the struggle begins for the exploitation by finance capital of a territory that has not been formally occupied by anybody, again the military power of the state decides who will possess that territory. In "peaceful" times the military state apparatus is hidden behind the scenes where it never stops functioning; in war times it appears on the scene most directly. The more strained the situation in the world sphere of struggle-and our epoch is characterised by the greatest intensity of competition between "national" groups of finance capitalthe oftener an appeal is made to the mailed fist of state power. The remnants of the old laissez faire, laissez passer ideology disappear, the epoch of the new "mercantilism," of imperialism, begins.

N.I. Bukharin: Imperialism and World Economy Chapter XII

It follows from the above that the actual process of economic development will proceed in the midst of a sharpened struggle between the state capitalist trusts and the backward economic formations. A series of wars is unavoidable. In the historic process which we are to witness in the near future, world capitalism will move in the direction of a universal state capitalist trust by absorbing the weaker formations

We have seen in the second section the peculiarities in the structure of modern capitalism and the formation of state capitalist trusts. This economic structure, however, is connected with a certain policy, namely, the imperialist policy. This not only in the sense that imperialism is a product of finance capitalism, but also in the sense that finance capital cannot pursue any other policy than an imperialist one, as we characterised it above. The state capitalist trust cannot become an adherent of free trade for thereby it would lose a considerable part of its capitalist raison d'être. We have already pointed out that protectionism allows the acquisition of additional profits on the one hand, facilitates competition in the world market on the other. In the same way finance capital, expressing as it does capitalist monopoly organisations, cannot relinquish the policy of monopolising "spheres of influence," of seizing sales markets and markets for raw materials, or spheres of capital investment. If one state capitalist trust fails to get hold of an unoccupied territory, it will be occupied by another. Peaceful rivalry, which corresponded to the epoch of free competition and of the absence of any organisation of production at home, is absolutely inconceivable in the epoch of an entirely different production structure and of the struggle among state capitalist trusts. Those imperialist interests are of such magnitude for the finance capitalise groups, and they are so connected with the very foundations of their existence, that the governments do not shrink before the most colossal military expenditures only to secure for themselves a stable position in the world market. The idea of "disarmament" within the framework of capitalism is particularly absurd as far as the state capitalist trusts that occupy the foremost positions in the world market are concerned. Before their eyes there always shines the picture of subjugating the whole world, of acquiring an unheard of field for exploitation-a thing termed by the French imperialists l'organisation d'économie mondiale and by the German imperialists, Organisierung der Weltwirtschaft Would the bourgeoisie exchange this "high" ideal for the pot of porridge of disarmament? Where is the guarantee for a given state capitalist trust that a pernicious rival will not continue the "abandoned" policy in spite of all formal agreements and guarantees? Everyone acquainted with the history of the struggle among cartels even within the boundaries of one country knows how often, when the situation changed, when the market conditions changed, agreements dissolved like soap bubbles. Imagine a strong state capitalist trust like the U. S. waging war against a union of all other trusts-the "agreement" will then be shattered to pieces in no time. (In the latter case we would have a tremendous formation constructed after the type of an ordinary syndicate, and having the state capitalist trusts as its component parts. Such an agreement between the state capitalist trusts would not be able at once to skip all intermediary stages, to become a real centralised trust. A type of agreement, however, that implies intense internal struggle is easily amenable to the influence of changing conditions.) We have taken a hypothetical case where formal unification is a fact. However, this unification cannot take place because the bourgeoisie of every country is by no means as naïve as many of its bona fide pacifists who wish nothing more than to persuade the bourgeoisie and to "prove" to it that it does not understand its own advantages....

N.I. Bukharin: Imperialism and World Economy Chapter XIII

The entire structure of world economy in our times forces the bourgeoisie to pursue an imperialist policy. As the colonial policy is inevitably connected with violent methods, so every capitalist expansion leads sooner or later to a bloody climax. "Violent methods," says Hilferding, "are inseparably bound up with the very essence of colonial policy, which without them would lose its capitalist meaning; they are so much an integral element of the colonial policy as the existence of a proletariat divorced from all ownership is generally a conditio sine qua non of capitalism. To be in favour of a colonial policy and at the same time to talk about eliminating its violent methods, is a dream which cannot be treated with more earnestness than the illusion that one can eliminate the proletariat while retaining capitalism."

The same thing may be said about imperialism. It is an integral element of finance capitalism without which the latter would lose its capitalist meaning.

It follows from the above that (as far as capitalism will retain its foothold) the future belongs to economic forms that are close to state capitalism. This further evolution of the state capitalist trusts, highly accelerated by the war, is reflected, in its turn, in the worldwide struggle among state capitalist trusts. We have seen above how the tendency to turn capitalist states into state capitalist trusts found its reflection in the mutual relations of the states. Monopoly tendencies within the "national" body have called forth tendencies to monopolise territories outside the home state by means of annexations; this has sharpened competition and its forms terrifically. With the further progress of internal centralisation, this acute situation will become more acute by leaps and bounds. Added to this is the rapid narrowing of the free field for capital activities. There is, therefore, not the slightest doubt that the near future will be fraught with the most cruel conflicts, and that the social atmosphere will not cease being saturated with war electricity. One of the outward expressions of this circumstance is the extraordinary growth of militarism and of imperialist sentiment. England, the land of "freedom" and "individualism," has already established a tariff and is organising a standing army; its state budget is being militarised. America is preparing war activities on a truly grandiose scale. The same thing is going on in Germany, in France, in Japan, and everywhere. The period of an idyllic "peaceful" existence has sunk into Lethe; capitalist society is whirling in the mad hurricane of world wars.

Chapter 14: World Economy and Proletarian Socialism

The first period of the war has brought about, not a crisis of capitalism (the germs of which were visible only to the most penetrating minds of both the bourgeois and proletarian camps), but a collapse of the "Socialist" International. This phenomenon, which many have attempted to explain by proceeding solely from the analysis of the internal relations in every country, cannot be more or less satisfactorily explained from this angle. For the collapse of the proletarian movement is a result of the unequal situation of the "state capitalist trusts" within the boundaries of world economy. Just as it is impossible to understand modern capitalism and its imperialist policy without analysing the tendencies of world capitalism, so the basic tendencies in the proletarian movement cannot be understood without analysing world capitalism.

Capital implies the existence of labour. Labour implies the existence of capital. The capitalist mode of production is a certain relation between people, between social classes, each of which implies the existence of the other. Viewed from this angle, both capitalists and workers are members, component parts, poles of the same capitalist society. In so far as capitalist society exists, there exists also an interdependence of these opposing classes, a mutual dependence, expressing itself in a relative solidarity of interests that are opposed in substance. This "solidarity" of interests is the solidarity of a moment, it is not that lasting solidarity which welds together the members of the same class. Bourgeois political economy, and together with it its "Socialist" followers, present that which is passing, momentary, accidental for the class struggle on a social scale as essential; they do not see the trees for the forest, and they inevitably sink to the rôle of simple satellites of finance capital.

Here is an example. Everybody knows that at the beginning of the capitalist era, when the working class had just begun to emerge and to separate itself from the small entrepreneurs, when so-called patriarchal relations prevailed between master and worker, the latter to a considerable degree identified his interests with the interests of his exploiter.

This identification of interests that are in substance totally opposed to one another, was, to be sure, not suspended in the air. It had a very real basis. "The better the business of our shop, the better for me," the worker of that time used to reason. This reasoning was based on the possibility of raising wages with the increase of the sum total of values realised by a given enterprise.

We find the same psychology in other variations. What, in fact, is, let us say, the so-called "craft ideology" of the English trade unionists? We find here substantially the same idea: our production, they say, our sphere of production, which embraces both workers and industrialists, must prosper before anything else. No interference of outside elements must be tolerated.

In recent times we find an analogy to this purely local patriotism in enterprises with highly skilled labour. Such enterprises, for instance, are the plants of the well-known American pacifist (and, incidentally, war contractor) Ford. The workers are carefully selected for the plant. They receive higher wages, they are granted various premiums and profit sharing under the condition that they be bound to the plant. As a result, the bamboozled workers are "devoted" to their masters.

On a larger scale the same phenomenon may be observed in the so-called working class protectionism with its policy of safeguarding "national industry," "national labour," etc. This ideology permeates a considerable part of the Australian and American workers: "We" (i.e., both capitalists and workers), they say, are equally interested in our national industry, for, the higher the profits of our employers, the higher will our wages rise.

In the process of competitive struggle between the various enterprises, their situation is not everywhere the same. Enterprises with highly skilled labour always occupy the first ranks, always enjoy exceptional privileges. Their share in the surplus value that is being produced in society as a whole is disproportionately large, for they receive differential profits on the one hand, cartel rents (as far as we deal with modern times) on the other. Thus a basis is created for a momentary interlinking of the interests of capital and labour in a given production branch, a circumstance which expresses itself in the workers giving capital, not the labour of duty, but the labour of love.

It is perfectly obvious that such a "solidarity of interests" between the capitalist and the worker is of a temporary character, and (from the point of view of what "ought to be") it cannot determine the conduct of the proletariat. Were the workers eternally to hang on to the coat tails of their masters, they would never be able to conduct a single strike, and the employers, bribing them individually, would be able individually to defeat them.

However, because the proletariat has not learned yet to distinguish local and temporary interests from general and lasting ones, it is permeated with such a narrow conception. The latter is overcome only when the class struggle achieves great scope, destroying local bigotry, welding the workers together, and throwing them into sharp opposition as a class to the class of the capitalists. In this way the psychology of the patriarchal period was overcome when the bond of unity between the workers and the master of an individual enterprise was severed. In this way the "craft ideology" of the unions organising skilled workers was overcome.

However, the end of the nineteenth century, which to a large degree destroyed the bond of unity between capitalists and workers, which placed against each other those classes and their organisations as classes and organisations hostile to each other in principle, has not yet destroyed the bond of unity between the working class and the greatest organisation of the bourgeoisie, the capitalist state.

The working class connection with this organisation was expressed in the ideology of workers' patriotism ("social-patriotism"), in the idea of a "fatherland," which the working class is supposed to serve.

After what has been presented above, the material basis of this phenomenon will become clear if we turn our attention to the whole sphere of world economy.

We have seen that the competitive struggle was, by the end of the nineteenth and the beginning of the twentieth century, to a large extent transferred to the foreign markets, i.e., it became a competition in the world market. Thus the state organisation of capital, the "fatherland," having turned into a state capitalist trust, took the place of the individual enterprise and appeared on the world arena with all its heavy and ponderous apparatus.

From this angle we must first of all view the colonial policy of the imperialist states.

There is an opinion current among many moderate internationalists to the effect that the colonial policy brings nothing but harm to the working class and that therefore it must be rejected. Hence the natural desire to prove that colonies yield no profit at all, that they represent a liability even from the point of view of the bourgeoisie, etc. Such a point of view is being propounded, for instance, by Kautsky.

The theory unfortunately suffers from one shortcoming, namely, it is out and out incorrect. The colonial policy yields a colossal income to the great powers, i.e., to their ruling classes, to the "state capitalist trust." This is why the bourgeoisie pursues a colonial policy. This being the case, there is a possibility for raising the workers' wages at the expense of the exploited colonial savages and conquered peoples.

Such are exactly the results of the great powers' colonial policy. The bill for this policy is paid, not by the continental workers, and not by the workers of England, but by the little peoples of the colonies. It is in the colonies that all the blood and the filth, all the horror and the shame of capitalism, all the cynicism, greed and bestiality of modern democracy are concentrated. The European workers, considered from the point of view of the moment, are the winners, because they receive increments to their wages due to "industrial prosperity."

All the relative "prosperity" of the European-American industry was conditioned by nothing but the fact that a safety valve was opened in the form of colonial policy. In this way the exploitation of "third persons" (pre-capitalist producers) and colonial labour led to a rise in the wages of the European and American workers.

One highly important circumstance must here be noted: in their struggle for colonies, for sales markets, and markets for raw materials, for capital investment spheres, for cheap labour, not all the "state capitalist trusts" achieve an equal success. While England, Germany and the United States of America forged ahead in their triumphal march over the world market, Russia and Italy, all the strenuous efforts of the imperialists notwithstanding, proved too weak. It was in this way that a few great imperialist powers came to the forefront as pretenders to world monopoly. They have proved, as far as the others are concerned, "above competition."

Economically the situation is this. World surplus value is being divided in the struggle for the world market. As is the case within the framework of "national economy," so also within the boundaries of world economy, the stronger competitor (whose strength is increased by multifarious factors, like the structure of production, the strength of the state militarist apparatus, convenient location due to the presence of "natural monopolies," etc.) receives super-profits, a kind of differential profit (due to the superior structure of production) and a kind of cartel rent (due to the pressure of the militarist apparatus that fortifies monopolies).

Super-profits obtained by the imperialist state are accompanied by a rise in the wages of the respective strata of the working class, primarily the skilled workers.

Such a phenomenon could also be observed in olden times. It was pointed out by Friedrich Engels who referred to the monopoly situation of England in the world market and to the conservatism of the English proletariat that resulted therefrom.

It was on the basis of this relative interest of the proletariat in colonial plunders that its connection with the masters' organisation of the bourgeois imperialist state grew and became strong. In Socialist literature this psychology found expression in the "national" point of view of the Social-Democratic opportunists. This "national wisdom," emphasised on every occasion, signified a complete abandonment of the point of view of revolutionary Marxism.

Marx and Engels viewed the state as an organisation of the ruling class that crushes the oppressed class with blood and iron. They assumed that future society would have no state at all, for the simple reason that there would be no classes. It is true that, for the transition period of proletarian dictatorship, when the proletariat is the temporary ruling class, they most correctly demanded a strong apparatus of working class state power to keep the overthrown classes in leash. Still, their attitude towards the oppressing state apparatus of the bourgeoisie was that of furious hatred, and from this point of view they mercilessly criticised the Lassalleans and other "statesmen." And a connection undoubtedly exists between this revolutionary point of view and the well-known thesis of the Communist Manifesto that the workers have no fatherland.

The Socialist epigones of Marxism have relegated this revolutionary opposition of Marx and Engels to the archives. In its place there emerge the theories of "true patriotism" and "true statesmanship," which, however, are in no way distinguishable from the most ordinary patriotism and the most ordinary statesmanship of the ruling bourgeoisie. Such an ideology was an organic outgrowth of the proletariat's partaking in the "great-nation policy" of the state capitalist trusts.

No wonder if after the outbreak of the great war, the working class of the foremost capitalist countries, chained to the chariot of the bourgeois state power, came to the aid of the latter. The proletariat was prepared for this by the whole preceding development; it was brought to this by its connection with the state organisation of finance capital.

However, the war itself, which could be waged only because the proletariat gave its tacit consent or showed insufficient indignation, has proven to it that its share in the imperialist policy is nothing compared with the wounds inflicted by the war.

It is in this way that there comes the crisis of imperialism and the rebirth of proletarian Socialism. Imperialism has turned its true face to the working class of Europe. Hitherto its barbarous, destructive, wasteful activities were almost entirely confined to the savages; now it thrusts itself upon the toilers of Europe with all the horrifying impact of a bloodthirsty elemental power let loose. The additional pennies received by the European workers from the colonial policy of imperialism-what do they count compared to millions of butchered workers, to billions devoured by the war, to the monstrous pressure of brazen militarism, to the vandalism of plundered productive forces, to high cost of living and starvation!

The war severs the last chain that binds the workers to the masters, their slavish submission to the imperialist state. The last limitation of the proletariat's philosophy is being overcome: its clinging to the narrowness of the national state, its patriotism. The interests of the moment, the temporary advantage accruing to it from the imperialist robberies and from its connections with the imperialist state, become of secondary importance compared with the lasting and general interests of the class as a whole, with the idea of a social revolution of the international proletariat which overthrows the dictatorship of finance capital with an armed hand, destroys its state apparatus and builds up a new power, a power of the workers against the bourgeoisie. In place of the idea of defending or extending the boundaries of the bourgeois state that bind the productive forces of world economy hand and foot, this power advances the slogan of abolishing state boundaries and merging all the peoples into one Socialist family. In this way the proletariat, after painful searching, succeeds in grasping its true interests that lead it through revolution to Socialism.


eugene plawiuk said...

China Income Gap Between Rich and Poor Provoking Alarm,
Reports Say

By Elaine Kurtenbach

September 21, 2005, Associated Press

SHANGHAI, China - The gap between China's richest and
poorest citizens is approaching a dangerous level and
could lead to social unrest, state media reported
Wednesday, citing a government study. The most affluent
one-fifth of China's population earn 50 percent of total
income, with the bottom one-fifth taking home only 4.7
percent, said the report by the official Xinhua News
Agency, carried in newspapers Wednesday.

"The income gap, which has exceeded reasonable limits,
exhibits a further widening trend. If it continues this
way for a long time, the phenomenon may give rise to
various sorts of social instability," it said.

The reports reflect a growing public recognition of the
simmering discontent that has provoked protests and
sometimes violent clashes in disputes over labor,
pollution and other issues. But apart from adjusting
income taxes to reduce the burden on middle-income
earners, there have been no signs the government plans
to confront the problem with any major policy changes.

Attention has focused especially on mistreatment of
migrant laborers from the countryside, in the wake of a
case involving a construction worker who killed four
people when he despaired about his pay.

Urban incomes in China now average about $1,000 a year,
while in the countryside incomes still average just over
$300. Other developing countries with income levels
about that of China, have tended to see "social
contradictions" over time, the Xinhua report noted.

These days, the wealth gap is evident everywhere, from
elderly citizens digging through downtown trash bins for
plastic bottles to recycle to migrant shacks squeezed
between luxury villas in Shanghai's suburbs.

Among the wealthiest are private business owners whose
fortunes were built through hard work and talent, the
Xinhua report said - and those whose riches stem from
corruption and crime.

Meanwhile, according to the China Poverty-Relief Fund,
nearly 30 million Chinese live in absolute poverty,
meaning that by local standards they lack enough food
and clothing. Another 60 million have incomes below 865
yuan (about $100) a year - well below the $1 a day that
the World Bank takes as its standard.

In a separate report, the state-run newspaper China
Daily took aim at the gaps in incomes of China's
government employees.

The topic is "a highly contentious issue, especially as
many in China cast doubt on the very existence of any
honest officials," it said.

It cited a report by Xinhua detailing a nearly seven-to-
one gap between the highest and lowest earners among the
country's more than 5 million civil servants - still
vastly more egalitarian than income levels in the
private sector.

But it noted that wages alone are only a small part of
the overall package for top civil servants, who once
they reach the vice minister level are allocated a
2,000-square-foot apartment worth at least 1 million
yuan ($125,000) and free use of a standard Audi sedan
worth at least 350,000 yuan ($43,000).

"The authorities have to proceed with extreme caution
whenever they make a policy or move (such as giving
civil servants a pay raise) in this area of flash
point," the report said.

Civil servants nationwide earn an average of 15,487 yuan
($1,900) a year, it said.

eugene plawiuk said...

Stephen Philion, “Reflections on China”
Posted to Monthly Review Web Site
Sept. 22, 2005

This time around, I was participating in a conference sponsored by the newly established Workers and Labor Research Institute of Peking University on the topic of Labor Participation and Workplace Governance. The conference addressed itself primarily to the role of democratic participation in the workplace as a means to protect workers' rights in China. The last time I participated in such a conference was as an observer of a similar one held by the then Chinese Workers' Movement College2 in 1999. At that conference, there was little concern about the crisis of Chinese workers and much praise for the impact that market-based "reforms" -- with the right amount of union and employer cooperation -- would have on workers' social and economic mobility. It was the first union-sponsored conference on labor where I witnessed a union cadre discuss how the theories of Alan Greenspan could be applied in a positive way to help workers!

At the recent conference, in contrast, Chinese and international intellectuals demonstrated a far greater awareness of the harmful impact that neo-liberalism has had on the status of workers in China and the collective forms of resistance it has spawned -- particularly in the state owned sector. Papers that they presented challenged the propagandistic claims that restructuring has enabled new factory-level institutions such as the Workers Representatives Congresses (WRC) to "democratically participate" in enterprise management. On-the-ground case studies of "democratically managed" factories transitioning from state to private stockholding revealed that the WRCs frequently are controlled by factory directors and upper-level managers. Where workers have the opportunity to "participate" in production decisions through stock ownership, they are invariably unable to counter the power of the largest owners of stock on the boards of trustees. Beyond critical reports on the actual nature of class power in China's state enterprises during transition, participants also reported on worker-led protests against losses they experienced as a result of Party-"capitalist" coordinated sell-offs of state assets. Discussions on workers' participation in production in China now -- perhaps for the first time in 20 years -- have come to include the idea of mobilization of self-organized collective protests.

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