Loren Goldner

The Chinese Working Class in the Global Capitalist Crisis:
Revolutionary Mass Strike or a New Bureaucratic Containment?

Theses

1. The regime founded by the Chinese Communist Party in 1949 was not “state
capitalism”, and still less a “workers’ state”. It was, like the Soviet Union and its
post-1945 eastern European satraps, a “transition to capitalism”, a “bourgeois revolution with red flags”, a preparation for full entry into the world market when circumstances permitted or required it. The Stalinist model, taken over from the Soviet Union, entailed a closed economy, state property technocratic planning, state control of foreign trade and the currency, and strict controls on the movement of the rural population (80% at the outset) toward the cities. These controls were like a “jack in the box” aimed at suppressing the operation of the capitalist law of value, both externally toward the world market, and internally in the “anarchy” of competition among firms, operating (as in the Soviet Union) in the underground economy. The emerging capitalist class was in the “interstices” of the state bureaucracy.

2. Since 1978, the evolution toward a “market socialism with Chinese characteristics” has meant a slow-motion opening of the “jack in the box”, allowing the suppressed aspects of capitalism to emerge increasingly to the surface. What remains of the old constraints are the state monopoly of foreign trade and of the currency, state control of foreign investment and a still significant state sector in both banking and companies, as well as continued restrictions on rural
movement to the cities.

3. China’s opening to the West, and to Western trade and investment, served both
China and Western capitalism well. China at the death of Mao and the fall of the
Maoist “Gang of Four” in 1976 was at an impasse, after the disaster of the “Great
Leap Forward” (1958-1961), in which between twenty and forty million died of starvation, followed by the chaos of the “Cultural Revolution” (1965-1976) in
which at least hundreds of thousands more died and in which millions of lives
were wrecked, including those of most of the 17 million students “sent down” to the countryside, often for ten years or more. Agricultural output per capita in 1978 was no higher than in 1949, possibly lower. The West, for its part, was deep into the post-1970 crisis from which it has not emerged. China, following the strategy of the “Four Tigers” (South Korea, Taiwan, Hong Kong and Singapore) would provide cheap consumer goods to partially offset the austerity increasingly afflicting Western workers. China also held out the potential for massive Western imports and investment.

4. Successful rapid industrialization has always depended on cheap food from the countryside, with eradication of pre-capitalist ownership as a pre-requisite. This eradication was carried out in China from 1949 to 1952. Nevertheless, whether in
small plot farming for state-controlled prices or the “people’s communes” of the 1960’s, along with the previously mentioned disaster of the “Great Leap Forward”, Chinese agriculture was largely a failure. Hence the first step in the reform program of the Deng xiao ping (Soviet-trained) technocrats, ousted and reviled as “capitalist roaders” during the “Cultural Revolution” and returned to power in 1978, was serious experimentation in agricultural production for a free market in (initially) specific locales, resulting in some instances in a 500% increase in crops.

5. China looked to many precursors for its reorganization. The regime and its think tanks carefully studied the collapse of the Soviet Union and the Comecon bloc, as a model to be avoided. The Chinese Communist Party (CCP) saw before it the previously mentioned Asian tigers, moving ahead at rapid rates of growth by astute use of their position in the international division of labor, in contrast to previous,
discredited Stalinist or Third Worldist models of autarchy and import-substitution. It looked to the history of Japan, the template of all the Asian tigers. Chinese think tanks have studied and continue to study the rise of Germany after 1870, which in their view offers the best example of a successful challenger to the international system, then dominated by Britain and France, today dominated by the U.S. The only thing they overlooked is the post-1914 decadence of the capitalist mode of production on a world scale, in which, in contrast to 1815-1914, expansion here (e.g. China, the Four Tigers) is offset by contraction there (the hollowing out of the U.S. and Europe, serious retrogression in Russia and eastern Europe, retrogression in much of the Middle East and elsewhere in the former Third World)

6. China’s growth averaging 10% per year over 30 years, is unprecedented in history, though of course drawing on the two previous centuries of industrial development elsewhere. (These growth rates must of course be set against the largely unmeasured huge costs of environmental destruction. ) In the past 1-2 years, China’s urban population has (like the world’s) reached 50%, though one must be careful when considering the estimated 270 million migrant workers who still do not have the residence permit (hukou) to settle permanently in urban areas with full access to housing, schools, and health care. Of the 1.3 billion total population, we can estimate that at least 200 million are urban proletarians.

7. The 2008 world crisis and ensuing “recession”, (in no way over), hit China hard, as its previous capital-intensive export model became unviable, also spreading crisis to many of its raw materials suppliers in the rest of Asia, in Latin America and in Africa. The regime, especially after the repression of the widespread worker and student revolt of 1989 in Beijing and elsewhere, worked on an implicit tradeoff with Chinese society: rapid growth, expanding employment opportunities, increased personal consumption and a relaxation of the state regimentation of everyday life, in exchange for political quiescence. Any serious slowing of growth threatens to undo this tradeoff. The initial response to the crisis was a huge increase in state-led investment, especially in infrastructure, both in new urban and rural development and in transportation. In the last few years, this temporary strategy has clearly reached its limits. The previous advantage of the low-wage “China price” is being lost to still cheaper competitors in Southeast Asia (e.g. Vietnam, Cambodia) South Asia (Bangladesh) and even Africa (Uganda, Kenya). While China has few “world class” corporations, the decades of development have produced tens of millions of technically-educated people capable of moving China “up the value chain” and beyond labor-intensive mass production, as for example in its world dominance in solar paneling.

8. By 2012, there were upwards of 100,000 “incidents” of popular unrest per year, ranging from strikes to riots to confrontations with local authorities over rural land seizures and real estate development. 2014 saw the highest number of strikes (12,000) ever, quite outside the control of the All-China Federation of Trade Unions (ACFTU), the discredited state-sponsored union. The regime has thus far been successful in keeping these struggles dispersed and localized, aimed at local authorities rather than the central government. Environmental destruction, pollution and health hazards are also increasingly at issue. Despite full-time monitoring of the internet by government agencies, the blockage of web sites, and the “Great Firewall of China” limiting access to the worldwide web, an uncontrolled mass discussion outside official channels has become a force to be reckoned with in shaping opinion, an unprecedented challenge to the Communist Party’s previous monopoly of information. A network of working- class militants outside the official state trade union has formed, however subject to surveillance and repression. China has apparently exhausted the supply of pliable rural labor power, and a more mature, better educated and informed working class is in formation., also putting upward pressure on wages in the coastal industrial zones (i.e. Guangdong province) and prompting capital to migrate toward the cheaper, western interior.

9. The regime and Chinese society generally are therefore at a crossroads. This blockage is only part of the general blockage of capitalism on a world scale. What is required is what occurred between 1914 and 1945, namely a vast “devalorization”, i.e. a shakeout, although on an even larger scale, like the shakeouts that ended every depression going back to the 19th century: unviable excess capacity must be written
down, discarded or destroyed, wage levels (the total social wage, not merely the paycheck) must similarly be driven down, and those of the vast armies of unproductive (white collar, “service” ) workers with them; cutting-edge technologies (the modern equivalents of electronics and auto in the previous crisis) must be freed from the straightjackets holding them back, to restore a viable, systemic rate of profit globally. A “managed depression” version of this crisis has been underway since the 1970’s. But it is not enough. Much greater destruction of productive forces is required. The fundamental problem is that, on a world scale, expanded social reproduction within a capitalist (“value”) framework can only be possible for a reduced part of existing humanity. The choice is stark: the world working class must destroy the capitalist mode of production, or be partially destroyed by it. “Socialism or barbarism” is not some romantic slogan, but the distillation of the most “scientific” thought around.

10. Let us imagine what a reorganized China would look like after such a shakeout, assuming that there would be a world “reconstruction” phase following such an earthquake and assuming no positive revolutionary breakthrough by workers. The first order of business would be a renewed form of containment of the working class, which would imply a replacement of the ACFTU by unions less directly dependent on the state. This would most likely be on the model of something like Polish Solidarnosc, after its legalization in the late 1980s. But such a legalization means (as it meant in Poland) the breaking of the party monopoly in society generally, and the state power of the CCP, it knows only too well, rests on precisely such a monopoly. Not for nothing have Chinese think tanks been studying the German “works councils” (not to be confused with genuine workers councils and soviets) established after World War II, which give workers some co-management powers in some enterprises. The most far-sighted must realize that, as the old saying goes, “everything must change for things to remain the same”. The problem of the bureaucracy jumping over its own shadow—a recognition that its own power is a key part of the social blockage—remains as true today in China as it was for Gorbachev in the Soviet Union in the 1980’s.

A second requirement would be a reorganization of the world financial system to adequately reflect the changes in the location of world production since the creation of the current institutions (IMF, World Bank, WTO–formerly GATT– the U.S. dollar standard) in place since the 1940’s. In 1960, 5% of world production was in East Asia; today it is on the order of 35%. U.S. domination could hardly survive an equitable reorganization of world institutions to adequately reflect such a change, and the U.S. is unlikely to accept such a demotion quietly.

A third requirement would be the creation of a wider power base in Chinese society as a whole, to underwrite and help push through this reorganization, a role performed by the CIO in the New Deal and Second World War (no strike pledge). No doubt NGOs would also play their role in this process. Coming fast behind this, in our thought experiment, would be a multi-party bourgeois democracy, which, like
its Russian and Eastern European counterparts, would be essential in further dismantling whatever bureaucratic constraints still protect sectors of Chinese society from the full weight of the world market. It is not likely that the main props keeping eastern Europe afloat, such as capital flows for the gentrification of its classical cities, the large-scale emigation of its educated youth and some direct foreign investment, would be available on an adequate scale for China.

Notes/Chronology

1949-Chinese Revolution: a “bourgeois revolution with red flags”; working class plays no role.
1949-1952: elimination of pre-capitalist landlord class
1956-1957: first major strikes, simultaneous with Hungarian Revolution, Polish October, during “Hundred Flowers” campaign. Repression follows.
1958-1961: “Great Leap Forward”, 20 to 40 million dead, famine, Mao “kicked upstairs” for debacle.
1966-1976: “Cultural Revolution”, Mao attempts to regain power; estimated 4 million die in factional battles. 17 million urban youth “rusticated”, many for 10 years or more. Universities closed for a decade.
1967-1968: Worker unrest in Shanghai and elsewhere, People’s Liberation Army (PLA) intervenes to restore order. Independent Shengwulian group appears, issues manifesto “Whither China?”, calling for revolution against both state factions, is crushed.
1972-Nixon visits Beijing while U.S. air force rains bombs on North Vietnam; beginning of US-China alliance
1976-Deaths of Chou en-lai and Mao; arrest of Maoist “Gang of Four”; mass popular anti-Gang of Four demo at Chou’s funeral. Creation of “Democracy Wall” in Tienanmen Square, filled with intense discussion on giant posters (“da zi bao”).
1978-Deng xiao peng returns to power after years of rustication, calls for “Four Modernizations”. Da zi bao appears calling for “fifth modernization: democracy”.
Author is sentenced to 18 years in prison; Democracy Wall shut down.
1982-onward: huge surge of agricultural production as peasants are allowed to produce for the market

1986-Wildcat strike at Sanyo (Japanese semiconductors) in Guangdong province.
1989-Worker, student protest in Beijing, other cities ends in bloodbath. Collapse
of “communism” in Eastern Europe, Gorbachev ousted in 1991
1992-onward. Economic expansion in China returns; Deng xiao peng’s “Southern Tour” gives green light to “market socialism”, touts free investment zones.
1992-1994-strike wave In Shenzhen. 1994 Labor Law for national minimum wage.

1995-2002: Massive layoffs (60-70 million) in “state owned enterprises” (SOEs), riots, demonstrations; many managers loot pension funds to privatize. End of
“iron rice bowl” and lifetime employment. Strike wave grows from year to year.
1997-98 Asia crisis; 1999 China slowdown as export markets contract.

1998-2003 privatization of 75 million units of social housing.

1999-China joins WTO with strong lobbying by Clinton White House
2000-2008 China’s cheap exports feed credit-fueled “sub prime” boom in U.S.
Massive foreign investment in Guangdong province.

2000-2002 Oil workers in northeast fight against privatization; 300,000 laid off .

2003-China passes U.S. as top recipient of foreign direct investment (FDI).

2004-Strike at (Japanese) Uniden plant for independent trade union. 4-5000 workers strike at Walmart supplier Sun factory against rationalization program.

2006-ACFTU organizes Wal-Mart China.

2008-SEIU head Andy Stern et al. visit Guangdong trade unionists.

2008-Labor Contract Law protects workers under contract, companies respond
by massive outsourcing.
2008-2009: U.S.,world meltdown leads to mass layoffs in China’s export industries;
millions of workers return to villages; Chinese government launches massive
reflation aimed at infrastructure and housing; export-led growth model in crisis.
2010-Worker suicides at FoxConn, Taiwanese supplier of Apple, with 1 million employees in the PRC. Wages raised to 1350 yuan ($200) for 10+ hour days, four days off per month.

2010-Strike wave affects mainly Japanese firms (e.g. four Honda plants), win significant wages increases.
2012-Team of CCP General Secretary Xi Jinpin and Premier Li Keqiang heads of state for 10-year cycle; launch unusually large anti-corruption campaign; Chongqing power broker and “Maoist” Bo ji lai falls. Growth based on bottomless supply of fresh rural labor falters. Pressure builds for reorientation to internal consumption.
2014-More than 100,000 “episodes” (riots, strikes, demos); thousands of strikes, as

well as peasant riots against land expropriation. There are roughly 270 million migrant workers from the countryside; China becomes 50% urban.
2015-July stock market crash wipes out $3 trillion of market capitalization