China and the Global Class Struggle: Journey of Revolutions

Dr. Minqi Li, Assistant Professor

Department of Economics, University of Utah

Phone: 801-828-5279; E-mail: minqi.li@economics.utah.edu

Draft Chapter for Book Project on “The Home Fronts of Globalization: National Class

Compromises, Re-composition of the Proletariat, and Transnational Opposition”

April 2007

There are three historical moments that have linked “China” (as an empire, a nation

state, or a geographical area) to the historical development of the capitalist world

system. First, China (and the East Asian trade system with China being the center)

was not incorporated into the capitalist world system until the 19th Century and it was

only with the incorporation of East Asia that the capitalist world system emerged as a

global system. Secondly, the Chinese Revolution (1949-1976) was unique among the

20th Century socialist revolutions in its degrees of mass mobilization and

radicalization, and had been an integral part of the “1968 World Revolution.”

Thirdly, China’s economic rise since the 1980s has been re-shaping the world’s

economic and geopolitical map rapidly and dramatically. On current trends, China

will soon become the world’s largest economy (measured by purchasing power

parity). What will then be the implications for the dynamics of the capitalist world

system? What will be the implications for the global class struggle? To explore these

questions, let us consider each of the three historical moments.

China and the 1848 World Revolution

Capitalism is a historically specific social system that can only exist under certain

historical conditions. Like every other social system, its own very existence, and its

operations, inevitably lead to the transformation of the underlying historical

conditions that will in turn result in its own demise. Marx and Engels advanced this

argument in the first political program they prepared for the coming world revolution

– The Communist Manifesto.

In The Manifesto, Marx and Engels argued that just like Feudalism, the “modern

bourgeois society” sooner or later would have to give way to a new social system as a

result of the “revolt of modern productive forces … against the property relations that

are the conditions for the existence of the bourgeoisie and of its rule.” In this case,

the development of the productive forces under capitalism would create an

increasingly larger and more powerful new social force – the modern proletariat.

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Moreover, capitalist development would prepare increasingly more favorable social

and technological conditions for the proletariat to organize for economic and political

struggles. In the long run, this would lead to a fundamental shift in the balance of

power between the bourgeoisie and the proletariat to the favor of the latter, leading to

the demise of the capitalist system:

The essential conditions for the existence, and for the sway of the bourgeois class, is the formation and

augmentation of capital; the condition for capital is wage-labour. Wage-labour rests exclusively on

competition between the labourers. The advance of industry, whose involuntary promoter is the

bourgeoisie, replaces the isolation of the labourers, due to competition, by their revolutionary

combination, due to association. The development of Modern Industry, therefore, cuts from under its

very feet the very foundation on which the bourgeoisie produces and appropriates products. What the

bourgeoisie, therefore, produces, above all, is its own grave-diggers. Its fall and the victory of the

proletariat are equally inevitable (cited from Tucker 1978: 483).

The Communist Manifesto was completed on the eve of the 1848 Revolution, which

Immanuel Wallerstein refers to as the “1848 World Revolution.” Uprisings of

working classes and oppressed peoples broke out throughout Europe. The uprisings

were crushed. But the underlying social forces and ideas evolved into the modern

socialist and national liberation movements that were to shape the world history of the

20th Century (Wallerstein 1998: 14-20).

In the early 19th Century, China remained the world’s largest economy, accounting

for about one-third of the global economic output (Maddison 2003). The China-

centered East Asian trade system remained intact. In fact, the Chinese Empire was

economically so competitive that the British East India Company had to export Indian

opium to China to balance its books. To enforce “socially responsible trade,” the

Chinese emperor sent his minister to Canton and burnt all of the imported opium, a

gross violation of British and American merchants’ private property.

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In response, the British Queen sent her gunboats. The “Opium War” (1840-1842)

ended with China’s defeat. In addition to ceding Hong Kong and paying war

indemnities, China also agreed to open five treaty ports. China and the rest of East

Asia began to be incorporated into the capitalist world system.

In October 1858, about the time when British and French allied forces took Beijing,

burnt and looted the imperial summer palace (during the second Opium War), Marx

wrote to Engels:

The specific task of bourgeois society is the establishment of a world market, at least in outline, and of

production based upon this world market. As the world is round, this seems to have been completed by

the colonisation of California and Australia and the opening up of China and Japan. The difficult

question for us is: on the Continent the revolution is imminent and will immediately assume a socialist

character. Is it not bound to be crushed in this litter corner, considering that in a far greater territory the

movement of bourgeois society is still in the ascendant? (cited from Tucker 1978: 676)

If, as Marx believed, in the “litter corner” of Western Europe, the advance of

productive forces and proletarianization had already reached the point that socialist

revolution became a real possibility, but the “specific task of bourgeois society is the

establishment of a world market … and of production based upon this world market”

and in the vast part of the world (including China) the process of modern industrial

development and proletarianization had barely begun, how could this “difficult

question” be resolved theoretically and historically?

Limits to Accumulation: Environment, Labor, and the State

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Capitalist production seeks continually to overcome these barriers, but overcomes them only by means

which again place these barriers in its way and on a more formidable scale. The real barrier of

capitalist production is capital itself (Marx 1967: 250).

All class societies are based on the exploitation of the majority working population

and the appropriation of the surplus product by a minority group. Capitalism is

unique among the class societies in that under capitalism, a significant portion of the

surplus product takes the form of profit (certain amount of money) and much of the

profit is continually re-invested as “capital” in pursuit of more profit, leading to

accumulation of capital on increasingly larger scales. In this sense, capitalism is a

social system that leads to as well as rests upon the endless accumulation of capital.

Capital accumulation is inherently a risky process and capitalists are constantly under

the potential threat of confiscation by state or non-state forces of violence. For capital

accumulation to be a self-sustaining and ever-expanding process, the profit has to be

sufficiently large from the capitalist point of view in relation to the value of capital

invested or the value of total production, as well as sufficiently secure and

predictable. If the disguise of money is to be unveiled, then essentially, out of the

total labor time a society commits to production activities over a given period of time,

the amount of the labor time that is committed to the production of the commodities

corresponding to the capitalist “profit” (luxury consumer goods and additions to

means of production) must be sufficiently large.

A portion of the total labor time has to be committed to the production activities

required to re-produce the existing means of production consumed over a given period

of time, or to maintain the simple reproduction of the existing economic system. The

portion of labor time required for this purpose depends on the prevailing technological

and social conditions, as well as the availability of resources and general

environmental constraints.

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Another portion of the total labor time has to be committed to the production activities

required to produce the means of consumption to be made available to the non-

capitalist population (primarily the working population or the working classes) over

the given period of time. The size of this portion of labor time also depends on the

prevailing technological and social conditions, but above all, depends on class

struggle and the relations of forces between different classes.

A third portion of the total labor time has to be committed to the production activities

required to produce the means of consumption as well as the means of destruction

(such as military equipment) consumed by the prevailing state over the given period

of time. It is necessary for the capitalists to pay the state such a protection fee so that

the state can monopolize violence over a given territory and provide other “services.”

It is only after the above commitments have been made, the remaining labor time can

be used in activities that may generate profit for the capitalists. Thus, for the profit to

be sufficiently large, the payments of material inputs (or the environmental cost), the

payment to labor (or the wage costs), and the payment to the state (or the taxes), have

to be sufficiently small from the capitalist point of view. This will in turn require

cheap and abundant supply of resources as well as “spaces” for pollution, cheap and

abundant supply of labor, and favorable relations of forces between the state and

capital from capital’s point of view.

As capitalist accumulation takes place in certain geographical areas, it tends to deplete

the local resources as well as cause environmental damages that undermine the

conditions of accumulation. Further, capitalist accumulation (as Marx and Engels

have argued) tends to bring about social transformations so that a growing proportion

of the labor force is proletarianized. The proletarianized working class tends to be

organized and its economic and political bargaining power tends to grow over time.

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Thus, as capitalist accumulation proceeds, both labor and the environment tend to

become increasingly more expensive.

Historically, capitalism has found “solutions” to these problems through geographic

expansion. By incorporating new geographic areas into the capitalist world system

and deepening their integration into the system, capitalism has been able to keep

expanding through access to areas where labor and resources remain cheap and

abundant, and where spaces for pollution remain available. However, in the long run,

sooner or later these processes will reach their limits. At a global level, beyond

certain point, it will no longer be possible to prevent the environmental cost and the

wage cost from rising inexorably (Wallerstein 1998: 35-64; 2003: 58-64; 224-230).

Most of the pre-modern civilizations were “world empires” with a centralized

political power dominating a large geographical area where basic production and

division of labor took place (Wallerstein 1979). By the 16th Century, an unique

historical situation emerged in Western Europe where several national states of

approximately equal sizes and capabilities emerged and were consolidated. The

condition of inter-state competition created a favorable political environment for

capitalist groups as the competing state sought their financial support. Moreover, the

emerging national states were motivated and pressured to provide active support for

activities of capitalist accumulation (Arrighi, Hui, Hung, and Selden 2003).

While the inter-state competition is essential for maintaining favorable relations of

forces between the state and capital and thus politically, the capitalist world system

has to be an inter-state system, for the system to function and expand it is also

necessary for the system to have certain institutions that could from time to time

effectively regulate the inter-state competition and when necessary promote the

system’s “common interest” that goes above and beyond the separate, immediate

interest of each individual state. Without such institutions, the system could soon

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collapse as national states ruin themselves through ruthless competition that destroys

vital physical and social infrastructure required for the functioning of the system.

Historically, it has been the successive hegemonic powers that have played this

function. The hegemonic powers have played crucial and leading roles in securing

“peace” in the world system as well as promoting other common interests such as

managing global trade and finance, constructing global income distribution and social

compromise, and regulating the global environment. As the capitalist world system

expands geographically and grows in size and complexity, historically, the successive

hegemonic powers have tended to become progressively larger in territorial size and

more powerful in term of military force and organizational capabilities (Arrighi

1994).

China and the rest of East Asia was the last large geographical area that was

incorporated into the capitalist world system. Since China was incorporated, for a

long time, the inter-connections between China and the capitalist world-economy had

remained relatively limited. China thus has served as a geo-strategic reserve for the

capitalist world system. Towards the late 20th Century, much of China’s labor force

remained in the rural areas and was readily available for capitalist accumulation on

favorable terms. The political conditions in China were such that massive resources

depletion and environmental pollution would meet with minimal resistance in the

short and medium-run. Finally, as the US entered into its decline as the hegemonic

power, China appeared to be a plausible candidate for the next hegemony.

On the battleground, when an army throws in its last reserve, it is on the verge of

collapse (a situation Napoleon found himself at Waterloo or indeed, Bush found

himself with the current “surge” in Iraq). As the capitalist world system mobilizes its

last reserves (such as China and India), it may not be far away from its final demise.

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China and the 1968 World Revolution

Like the other 20th Century socialist revolutions, the Chinese Revolution was

confronted with an inescapable dilemma.

On the one hand, the revolution was based on the broad mobilization and support of

the workers and peasants comprising the great majority of the population, and as a

result, would necessarily reflect the interests and aspirations of the ordinary working

people.

Between the 1950s and the 1970s, for about three decades, the Chinese workers and

peasants enjoyed unprecedented gains in economic, social, and political rights as well

as material living standards. The urban working class enjoyed a wide range of

economic and social rights that include job security, free health care, free education,

subsidized housing, and guaranteed pensions that together constituted what were

referred to as the “iron rice bowl.” By the 1970s, more than 90 percent of the

peasants had access to basic education and basic medical insurance. Towards the late

1970s, China’s health and education indicators had reached levels that were

comparable to middle income countries. Women in both the urban and the rural areas

made major advances in economic and social status. Workers and peasants or

selected individuals from them to different degrees participated in the management of

industrial and agricultural production, education and other public services, literature

and arts, science and technology, and state affairs (Meisner 1999: 413-426; Wen

2005).

On the other hand, China remained a part of the capitalist world system, and was

under constant and intense pressure of military and economic competition from

imperialist states and other big powers. From the mid-19th Century to the mid-20th

Century, China was reduced from the world’s largest economy to a peripheral

member of the capitalist world system with one of the lowest per capita incomes.

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Since 1840, China had lost a series of wars against nearly every western power and

was invaded by Japan twice with devastating consequences. Before the Communist

victory, China barely functioned as a viable nation state.

As the communists won the “Liberation War” (the 1946-1950 civil war) and took

over the national power, the immediate challenge was to re-build China as a viable

and unified nation state. In the long run, this would require China to “catch up” with

the West or the core states of the world system in economic and military terms. To

accomplish this, China must engage in industrialization and rapid capital

accumulation.

To mobilize resources for accumulation, surplus product had to be extracted from the

workers and the peasants and concentrated in the hands of the state. This created

opportunities for the state and Party bureaucrats to make use of their control over the

surplus product to advance their individual power and interests rather than the

collective interest of the working people. Further, industrialization required technical

and managerial expertise, which was concentrated in a small group of intellectuals

and “experts” that typically had capitalist or landlord family background (Meisner

1999: 103-128). Thus, as capital accumulation and industrialization proceeded, there

were tendencies for a new privileged social class consisting of bureaucrats and

technocrats to emerge that, if not effectively checked, would become increasingly

alienated from the working people and evolve into the new capitalist class.

It was in this context that the Chinese Communist Party leadership was divided into

two factions advocating two different “lines.” One faction, led by Liu Shaoqi and

Deng Xiaoping, declared that the principal contradiction in socialist China was no

longer between antagonistic social classes but “between the advanced socialist system

and the backward social productive forces” (Meisner 1999: 303). It follows that the

Communist Party should no longer focus on class struggle. Instead, the Party’s main

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task was to promote economic development. This would require the concentration of

power and authority in the hands of those having technical and managerial

“expertise,” as well as the widespread use of material incentives and market relations.

Rising economic and social inequality was justified by the “socialist” distributive

principle: “from each according to his ability, to each according to his labor.”1

Against the Liu-Deng “revisionist” faction, Mao Zedong argued that: “the socialist

society is a rather long historical period. Within the historical period of socialism,

classes, class contradictions, and class struggles continue to exist. There is the

struggle between the socialist road and the capitalist road. There is the danger of

capitalist restoration.” (Talk given at the Beidaihe Central Committee Working

Conference and the Tenth Plenum of the Eighth Central Committee of the Communist

Part of China, August and September 1962, originally cited from The Red Flag, 1967,

Number 10)2

1 In Critique of the Gotha Program, Marx argued that: “what we have to deal with here is a communist

society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from

capitalist society; which is thus in every respect, … still stamped with the birthmarks of the old society

from whose womb it emerges. … [A]s far as the distribution of [individual means of consumption]

among the individual producers is concerned, the same principle prevails as in the exchange of

commodity equivalents: a given amount of labour in one form is exchanged for an equal amount of

labour in another form. Hence, equal right here is still in principle – bourgeois right … This equal right

is an unequal right for unequal labor. … [I]t tacitly recognises unequal individual endowment and thus

productive capacity as natural privileges. … In a higher phase of communist society, … after labour

has become not only a means of life but life’s prime want … only then can the narrow horizon of

bourgeois right be crossed in its entirety and society inscribe on its banner: From each according to his

ability, to each according to his needs!” (cited from Tucker 1978: 529-531)

2 The various quotations of Mao Zedong citied in this paper were found from various Chinese websites.

This author is responsible for all possible errors in the Chinese text as well in translation.

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In 1964, after reading an on-site report on the “Socialist Education Movement” in a

tractor factory, Mao made the following comments:

The bureaucratic class, and the working class, poor and lower middle peasants, are two sharply

antagonistic classes. They are becoming or have become the bourgeois elements who suck the

workers’ blood. How can they recognize [the necessity of socialist revolution]? They are the objects

of struggle, the objects of revolution (Comments on Chen Zhengren’s report on Socialist Education

Movement at Luoyang Tractor Factory, December 12, 1964 and January 15, 1965).

After several attempts to re-revolutionize the Party from within had failed, Mao made

a direct appeal to the ordinary workers, peasants, and students, calling on them to

rebel against the “capitalist roaders who are in authority in the Party,” that became the

Great Proletarian Cultural Revolution.

Several historical factors contributed to the failure of the Cultural Revolution. First,

China remained a part of the capitalist world system and intense inter-state

competition was a constant constraint. After 1969, the Maoists and the rebels were

forced to retreat from the fights for provincial and local powers, re-stabilizing

domestic political and economic order and preparing for international wars. The “old

cadres” were rehabilitated and again in control of much of the Party and state

bureaucracy as well as the military. Secondly, despite Mao’s personal charisma and

seemingly unquestioned authority, the Maoists did not have effective control over the

army. The “old cadres” were often able to receive support from local army units and

repress the rebels by force.3 Mao made a tactical pact with Lin Biao to secure the

3 In the mainstream western literature, the Chinese official literature, most of the literature on the

Cultural Revolution by China’s liberal intellectuals, and numerous novels, poems, memoirs, and

movies often written by the sons or daughters of former privileged bureaucrats, the violent crimes

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army’s neutrality. After Lin Biao’s coup attempt failed, Deng Xiaoping (who had led

a large field army during the civil war) became the most influential among the

remaining army leaders.

The unique Maoist theoretical contribution was that there must be “continuing

revolution under the dictatorship of the proletariat.” However, in the 1950s Mao and

his comrades could benefit from no or very little historical experience. The Soviet

Union was regarded as the leader of the world socialist revolution and the successful

example of “socialist industrialization.” It was not until the early 1960s that Mao had

reached a better and deeper understanding of the class contradictions and class

struggles in the new “socialist society.” By then the privileged bureaucrats and

technocrats had already to a large extent consolidated their power.

Finally, the ordinary Chinese workers and peasants were politically inexperienced and

unprepared. Despite the Maoist warning of the danger of capitalist restoration, the

Marxist-Maoist theoretical reasoning appeared to be detached from the daily

experience of the ordinary workers and peasants. To the ordinary Chinese workers

and peasants in the 1970s, it must have seemed to be a quite remote and extremely

unlikely prospect that the capitalist property relations could someday return with full

vengeance and that the workers and peasants would have lost all of their socialist

rights and be reduced to working slaves subject to the most ruthless capitalist

exploitation.

Exhausted by the inconclusive power struggles, the urban working class became

politically passive and was caught off guard by the 1976 counter-revolutionary coup.

committed by the conservative Party and state bureaucracy (supported by the “royalist” red guards) are

often loosely attributed without any clarification to all red guards, thus in effect putting the blame on

the Maoists and the radical “rebel” red guards.

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With the defeat of the Maoists, the working class lost ideological and organizational

leadership. Confused and de-politicized, the Chinese working class was to be taken

advantage of by both the ruling elites and the opportunistic middle class “democratic

movement”, paving the way for the tragic defeat of 1989.

The Chinese Cultural Revolution was part of the “1968 World Revolution.” In

January 1968, Shanghai workers took over power from the city Party bureaucracy and

declared “Shanghai Commune.” In May, the French workers and students were in

effect controlling the country. The French capitalist system was on the verge of

collapse. Revolutionary waves swept through the core, the periphery, and the

“socialist camp.” The Maoist critique of “revisionism” was one of the ideological

weapons that the “new left” used to criticize and reject the “old left” that had been co-

opted by the global reformism. The global revolutionary upsurge started to retreat

only after the defeat of the Chilean revolution in 1973 and the Portuguese revolution

in 1975.

The 1968 World Revolution exposed the limit of social reforms within the capitalist

world system (Wallerstein 2000: 355-373). After WWII, in response to the growing

threat of working class movements and national liberation movements, the US

imperialism (at peak of its world hegemony) attempted to build a new global social

compromise that could effectively divert the political threat from the now powerful

socialist movements and national liberation movements.

Internally, under the “new deal” democrats, the US undertook Keynesian

macroeconomic policies and certain social reforms that ushered in an era of “capital-

labor accord” characterized by rapid expansion of employment and real wages

(Bowles, Edwards, and Roosevelt 2005: 164-169). Further, the US allowed (and to

some extent, encouraged through Marshall plan and investments by US corporations)

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Western Europe and Japan to develop similar and in some cases, more generous

programs of social reform.

To accommodate the growing aspirations and mobilization abilities of the indigenous

capitalists, the middle classes, and the urban working classes in the periphery, and to

further expand the market for the US corporations, the US also pushed for de-

colonization of the periphery and offered financial and technical assistance to support

“economic development.” It should also be pointed out that in the 1950s and the

1960s the US took a relatively liberal attitude towards import-substitution or state

capitalist development programs.

Through the Yalta arrangement, the US allowed the Soviet Union to have its own

“sphere of influence.” In exchange, the Soviet Union implicitly agreed to act as a

“responsible” super power and abandoned the support of revolutionary communist

movements outside its sphere of influence. This was immediately effective in Greece.

It also played a role in the disarming of the French and Italian communists. Both the

Chinese Revolution and the Cuban Revolution were against the will of Moscow

(Wallerstein 2000: 374-386).

The period 1950-1973 is widely referred to as the “golden age” of capitalism. The

core states experienced unprecedented rapid economic growth. In the early 1950s,

capitalist accumulation in the core states could still draw upon the sizeable surplus

labor force in the rural areas. However, towards the late 1960s, the process of

proletarianization was nearly complete throughout the core zone. The welfare state

institutions and the Keynesian macroeconomic policies further enhanced the

bargaining power of the working classes. Labor militancy was growing everywhere.

After the mid-1960s, the profit rate declined precipitously throughout the capitalist

world-economy.

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The semi-peripheral states (primarily Latin America, Eastern Europe and the Soviet

Union) were under similar pressures from the more militant working movements. By

the 1970s, both the import-substitution industrialization model and the “socialist

industrialization” model were clearly in trouble. The semi-peripheral states attempted

to prolong the phase of rapid accumulation by borrowing heavily the “petro-dollars”

through western banks, a move that eventually led to the 1980s debt crisis.

The global ruling elites moved to organize a major counter offensive that is now

generally known as “neoliberalism.” Monetarist and free market policies were first

implemented in Chile after the installation of the Pinochet fascist regime in 1973. In

the core states, monetarism did not prevail until Thatcher came to power in the UK in

1979 and Reagan came to power in the US in 1980. Monetarism is essentially a

program to destroy the working class’s bargaining power by creating high

unemployment under the excuse of fighting inflation.

Other neoliberal policies include rolling back the welfare state, labor “flexibility”,

deregulation of product and financial markets, and trade liberalization. But the core

zone working classes managed to fight a defensive battle (more effective in Western

Europe than in the US) that has limited the damages of the neoliberal policies. It is in

the semi-periphery where neoliberalism, under the programs of “structural

adjustments” or “shock therapy”, was fully carried out and delivered the most

devastating social consequences.

“Globalization” is an indispensable component of neoliberalism. Through greater and

deeper integration of the peripheral and semi-peripheral economies into the capitalist

world-economy in the form of trade and capital flows, capital in the core zone can be

re-located to the periphery and semi-periphery where large reserves of cheap labor

force are available and there are no or little political constraints to resources depletion

and environmental degradation, thereby raising the global profit rate.

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The “rise of China” or the “rise of India” needs to be understood in this context. The

neoliberal project brings about devastating consequences to the working people in the

world. But, politically and economically, it is also very costly to the global

capitalists. Without the opening up of China and India and the following economic

boom, neoliberalism could prove to be too costly not only for the workers but also for

the capitalists and end up being very short-lived.

China and the 1989 World Counter-Revolution

All great historical figures are conscious of not only their own historical contributions

but also their own historical limitations. As Mao approached the end of his life, he

was quite conscious that the historical relations of forces were against him, even

though his optimism about the long-term prospect of the world revolution was by no

means diminished. Meeting with the visiting Danish Prime Minister, Mao said:

To summarize, China can be characterized as a socialist state. Before the Liberation, it was not very

different from capitalism. Now there is still the eight-grade wage system, distribution according to

labor, exchange with money, all of these are not very different from how things were in the old society.

Only that the property relations have changed. … Now there is the commodity system in our country,

and the wage system is an unequal one, there is the eight-grade wage system. These can only be

restricted under the dictatorship of the proletariat. Therefore, if Lin Biao and his likes come to power,

it will be very easy to restore capitalism (originally cited from People’s Daily, February 22, 1975).

Between October 1975 and January 1976, Mao had the following comments:

Is there class struggle in a socialist society? … Class struggle is the key, the rest will follow. Stalin

made a big mistake on this, but not Lenin. Lenin said, petty production generates capitalism every day,

every hour. Lenin talked about building a bourgeois state without the bourgeoisie, to secure the

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bourgeois rights. We ourselves have exactly built such a state, not very different from the old society

…

Some comrades, mainly the old comrades, their thinking has not moved beyond the bourgeois

democratic revolution. They do not understand the socialist revolution, they have resentments, they

even oppose [the revolution], … and want to settle accounts with the Cultural Revolution. … After the

democratic revolution, the workers and the poor and lower middle peasants did not stop, they want

revolution. However, some of the Party members did not want to proceed any more. Some even

moved backwards, opposed the revolution. Why? They have become big bureaucrats, and want to

protect the interest of big bureaucrats. They have good houses, cars, high salaries, and servants, [they]

live even better than the capitalists. Now socialist revolution comes to themselves, … they do not like

the criticism against bourgeois rights. To have socialist revolution, but do not know where the

bourgeoisie is, it is within the Communist Party, it is the capitalist roaders who are in authority in the

Party. The capitalist roaders are still on the [capitalist] road.

Mao died in September 1976. About a month later, the new Party Chairman Hua

Guofeng, a political opportunist, undertook a coup and arrested the radical Maoist

leaders (the so-called “Gang of Four” led by Jiang Qing, Mao’s wife), with the

backing of the “old cadres” and the implicit support of Deng Xiaoping. Hua soon

proved to be politically useless and by 1979, Deng was effectively in charge of the

Party and the state and started the “economic reform.”

The early economic reform actually brought about immediate material benefits to

nearly every social layer. In the rural areas, the “family contract system” was

implemented which in effect privatized the agriculture. In the early 1980s, as the use

of chemical fertilizers and pesticides surged, and with the help of the infrastructure

built under the collective era, agricultural production expanded rapidly. The peasants’

incomes also grew rapidly and in fact, more rapidly than the incomes of the urban

households in this period. As the availability of food and other agricultural goods

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improved, the urban working class also enjoyed rapid improvement in living

standards and began to have access to various modern consumer goods (Meisner

1999: 460-469; Wen 2005).

With these temporary concessions made to the workers and the peasants, Deng

Xiaoping and the “reformers” were able to consolidate their political power. By the

mid-1980s, the “reformers” were in firm control of the Party and the state. They

began to push for labor disciplines and market reforms in the state owned enterprises,

the stronghold of China’s urban working class. The 1988 “enterprise law” provided

that the state owned enterprise managers had the full authority to dictate everything

within an enterprise, including the power to fire or lay off the workers. The

development of market relations also provided ample opportunity for sections of the

privileged bureaucrats to enrich themselves. A new bureaucratic capitalist class

emerged (Meisner 1999: 469-479).

The urban working class was politically passive and disoriented. But it remained

quite powerful at the factory level. Despite the provisions of the 1988 enterprise law,

the power to fire workers was rarely exercised by the management in the late 1980s.

On the contrary, with the “iron rice bowl” still intact, the state sector management was

forced to use generous material incentives to motivate the workers to increase

productivity. The second half of the 1980s saw rapid increase in urban workers’

wages. To maintain profitability, the state owned enterprises raised prices trying to

pass the costs to the consumers, leading to general acceleration of inflation.

On the other hand, to meet the growing demand for modern consumer goods from the

new capitalist class and the middle class, but also from the urban working class,

China’s imports of modern consumer goods and the capital goods to be invested in the

“import substitution” consumer good industries surged. Unlike in the 1990s and later

years, China was running large trade deficits in the late 1980s. The overall economic

18

situation was not unlike Latin America or Eastern Europe in the late import

substitution years, and had become increasingly unsustainable.

Back to the 1980s, the word “intellectuals” broadly referred to any one that had had a

higher education in China, including university teachers, engineers, doctors, writers,

artists, and even university students, who were to become China’s emerging urban

middle class.

The intellectuals were traditionally a privileged social group in China. Their material

privileges were significantly reduced under Revolutionary China (but did not

completely disappear). Most of the Chinese intellectuals in the 1980s were from

families that were capitalists or landlords before the Revolution. Their resentments

against the revolution (especially the Cultural Revolution) were strong and they often

did not hide their contempt and hatred of ordinary workers and peasants.

The intellectuals were in favor of the growth of market relations. They hoped to gain

in material privileges with greater degrees of social and economic inequality. They

also hoped that through greater integration into the global capitalist market, their

incomes and living standards could approach their counterparts in the core states.

Towards the late 1980s, many of them openly called for full-scale privatization and

free market capitalist system.

While the intellectuals and the ruling elites shared the broad objective of transition to

capitalism, there was no agreement on how the political power and the economic

benefits of capitalist transition should be divided between them. The intellectuals

were dissatisfied with the fact that as wealth started to be concentrated in the hands of

bureaucratic capitalists and private entrepreneurs, they did not have a share of this

newly accumulated capitalist wealth. Many of them complained that their income

growth was not more than that for the urban workers.

19

All of these were behind the intellectuals’ call for “freedom and democracy.” In

effect, the Chinese intellectuals were asking for a bigger share of the power and

wealth as China moved towards capitalism. Some of them explicitly called for “neo-

authoritarianism,” taking Japan, Taiwan, Singapore, and South Korea as the model,

advocating a capitalist model that would be repressive towards the working class but

could secure “property rights” for the capitalists and “civil liberty” for the

intellectuals (Meisner 1999: 493-499).

Throughout the 1980s, there were several waves of intellectual criticisms of the

Communist Party (sometimes backed by university student demonstrations) followed

by official movements against “bourgeois liberalization.” The intellectuals and the

ruling elites were testing forces before a dramatic showdown that would settle the

terms under which they would unite in a general offensive against the urban working

class.

The ruling elites were divided into three factions. The right wing (usually referred to

as “radical reformers” in the western literature) was led by Zhao Ziyang, the Party’s

General Secretary as well as the Prime Minister. These “reformers” actually

represented the most corrupt sections of China’s bureaucratic capitalists that had

gained the most in the early years of China’s capitalist transition. Zhao was in favor

of a Chinese version shock therapy: full-scale liberalization and privatization right

away. The slogan at the time was: “let the prices make one jump over the river,”

meaning immediately remove all social subsidies and liberalize all prices.

The “left” wing (usually referred to as “conservatives” in the western literature) was

led by Chen Yun, who grew up in a workers’ family and was a veteran communist

leader. Chen represented the veteran communists in the Party who, although by no

means were opposed to the privileged bureaucratic system, nevertheless maintained

20

some affection with the original revolutionary goal. Chen was in favor of “socialist

planned commodity economy” (as supposed to “market economy”) where the state

would control the commanding heights. Politically, Chen advocated slogans such as

“[The Party] must wholeheartedly rely upon the working class.” In fact, Chen was

advocating a state capitalist model that would rest upon a social compromise between

the capitalist class and the urban working class.

But the master of the Chinese politics was Deng Xiaoping. Although Deng had

officially “retired,” he kept the crucial position of the Chairman of the Central

Military Committee and had the backing of the majority of the bureaucracy and the

army. Deng understood that the state capitalist model proposed by Chen was

politically and economically unsustainable. For China to complete a successful

capitalist transition and for the bureaucratic capitalist class to secure its fundamental

political and economic interest, the remaining power of China’s urban working class

must be broken. For that, the ruling elites did need to have the support of the

intellectuals or the urban middle class.

However, Deng was politically experienced enough to know that Zhao’s strategy

amounted to a political suicide. The implementation of shock therapy without

breaking the working class’s political power would immediately lead to a general

working class rebellion. Further, while a political alliance between the bureaucratic

capitalist class and the urban middle class was necessary to defeat the working class,

the intellectuals must first be taught a lesson so that they would settle for no more

than a junior position in the pro-capitalist political alliance.

To accomplish this, the ruling elites should force the intellectuals into a political

showdown (which the “democratic” intellectuals were smart enough to give them the

chance) and then call the bluff, as the intellectuals would not dare or want to really

21

mobilize the working class and without the political mobilization of the working

class, the intellectuals would be nothing but powerless.4

After teaching the intellectuals a lesson, the ruling elites then could move to build the

alliance with the intellectuals under the banner of “reform and openness.” With such

an alliance, the bureaucratic capitalist class (now with the political and ideological

support from the intellectuals) would be ready for a full-front attack on the urban

working class. Most of the state owned enterprises were to be privatized, tens of

millions of workers were to be laid off, and the remaining socialist rights were to be

dismantled. Moreover, the dismantling of the collective system and the collapse of

the rural public infrastructure would force hundreds of millions of peasants into the

cities and become the “migrant workers.” A huge cheap labor force would be created

that, in the short to medium-run, would work for the Chinese and foreign capitalists at

the lowest possible wages under the most demeaning conditions. The massive

inflows of foreign capital would in turn create a huge export boom – producing a

Chinese “economic miracle.”

In retrospect, Deng’s political plan worked marvelously well. 5

The year of 1989 saw the crash of China’s “democratic movement.” It also saw the

fall of the Berlin Wall. In both cases, the working classes lost. The following

“economic reforms” carried out by the “democratic” governments in the Eastern

Europe and the former Soviet Union or the “communist” government in China

4 There is an old Chinese saying: a Confucian Scholar who pretends to rebel [against the emperor],

would never make it.

5 On further discussions about the classes and their relations inChina in 1989, see Li (1996), Meisner

(1999: 449-513), and Wang, Li, and Wang (2003).

22

brought about enormous sufferings to the working classes. The advocates of the

existing world system could therefore celebrate the “end of history.”

But, has history ended?

China and the End of the Capitalist History

In the short and medium-run, China’s deeper integration into the global capitalist

market brought in a huge reserve of cheap labor force. China’s cheap labor force

creates opportunities for the capital in the core states to relocate, either physically or

through outsourcing, and profit from China’s low wages and the lack of

environmental regulation. Such a development, objectively, greatly undermines the

bargaining power of the working classes in the rest of the world (but especially in the

core zone) and has contributed to the reign of neoliberalism.

But in the long run, capitalist accumulation will certainly bring about enormous

transformations to the Chinese society. As hundreds of millions of rural migrant

workers move to the cities, in one, two, or three decades, a large, numerically

majority proletarianized working class will have taken shape. This working class,

will follow the footsteps of the working classes in other parts of the world, learn and

start to get organized, demanding economic and political rights, and forcing the

capitalist class to make more and more concessions. In short, the Chinese working

class will no longer be “cheap.”

What could the Chinese capitalist class do then? They might want to follow the

example of their western counterparts, looking for new spaces with cheap labor force.

But by then maybe the Indian working class will have become as “expensive” as the

Chinese. Where else in the world could the Chinese or the western capitalists find a

cheap labor force that is nearly as large as the Chinese or the Indian working class?

23

In the end, Marx could prove to be right after all. As capitalist accumulation keeps

generating its own grave-diggers in the form of proletarianized working classes

throughout the world, eventually we will move towards the end of the capitalist

history.

But the end of the capitalist history might come sooner than the completion of the

world-wide proletarianization. Already, China is suffering from the world’s worst

environmental degradation and because of China’s enormous size, it has by now

become a major global force in resources depletion and environmental destruction. It

is completely possible that even before the Chinese capitalism is hit by a general

explosion of social crisis, it is first brought down by a food crisis, an energy crisis, or

a general collapse of the ecological system.6

In the past, the rise of a new hegemonic power has played an indispensable role in

resolving the system-wide crisis of the capitalist world system. Now there is clear

evidence that the US hegemony is declining in industrial, financial, and military

terms. The US is no longer willing or able to act in the interest of the system as a

whole. On the contrary, the attempt by the US imperialism to preserve its remaining

influence has generally tended to bring about greater instability and chaos to the

whole system. But who among the big powers, the European Union, Russia, China,

India, or Brazil, is even remotely close to replace the US and function as the effective

leadership of the capitalist world system? To play such a role, the new hegemonic

power must not only establish unquestioned industrial, financial, and military

advantages over the other big powers, but also act in the interest of the system as

whole and provide genuine solutions to the system’s economic, geopolitical, and

environmental crisis.

6 On China’s environmental crisis and its global impact, see Wen and Li (2006).

24

The fact that such a new hegemonic power is nowhere in sight, again signals that we

are not far away from the end, of the capitalist history.

As any great and genuine revolutionary would do, Mao Zedong, as a soldier, a fighter,

a dialectical materialist and historical materialist, was always prepared to look

forward to victory exactly when the immediate relations of forces were unfavorable.

In 1962, as the Sino-Soviet split over the general direction of the International

Communist Movement became inevitable, Mao said:

In China, or in other countries in the world, in the last analysis, more than ninety percent of the people

eventually will support Marxism-Leninism. In the world, there are still many people, who are deceived

by the Social Democrats, by the revisionists, by imperialism, and by the reactionaries of different

countries. They are not yet awaken. But sooner or later they will be awaken, will support Marxism-

Leninism. The truth of Marxism-Leninism is irresistible, the masses of people sooner or later will want

revolution. The world revolution sooner or later will be victorious (Talk at the 7,000 people

conference, January 30, 1962, originally citied from People’s Daily, April 22, 1970).

Four years later, as Mao entered into the last major battle in his lifetime, he wrote to

his wife and comrade, Jiang Qing:

From great chaos under the heaven, to great peace under the heaven. … I am somewhat like a tiger,

this is the primary aspect, I am also somewhat like a monkey, this is the secondary aspect. … I am

ready to be broken into pieces. There are more than 100 [Communist] Parties in the world, most no

longer believe in Marxism-Leninism. Marx, Lenin, have been broken into pieces, not to say ourselves.

… If anti-communist rightist coup were to take place in China, I am sure they will not be able to live in

peace, they are likely to be short-lived, because all the revolutionaries that represent the interest of

more than ninety percent of the people will not tolerate them. By then, the rightists might use some of

my words to prevail for a while, but the leftists will inevitably use some of my other words to get

25

organized, and overturn the rightists. … The Cultural Revolution, … is a general rehearsal, the leftists,

the rightists, and the wavering middle-of-the-roaders, will each receive their own lessons. Conclusion:

the future is bright, but the path is tortuous (Letter to Jiang Qing, July 8, 1966).

26

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