Questions for Ulhas and Henry on India and China

Saul Thomas stthomas at SPAMuchicago.edu
Fri Jun 1 18:16:38 MDT 2001


At 08:55 AM 6/1/01 +0530, you wrote:
>In economies like China and India, which are economies driven by
>domestic markets, domestic savings and domestic investment, the foreign
>capital actually contributes to the capital accumulation. Foreign capital is
>not an obstacle to the process of capital accumulation in China and India,
>since this is subordinated to the domestic capital accumulation.

Ulhas,
Thanks much for your responses. Here are some more questions:
If I understand correctly, you are saying that integration with the
capitalist world economy has actually helped India develop strong economic
growth, and at the same time helped develop a strong and independent
national bourgeoisie. Competition with advanced foreign industries has not
wrecked Indian industry, but rather forced it to become more competitive
and has ended up strengthening it. Was this possible because Indian
industry did not have to build up from scratch, but was already built up,
in a protected environment, during the Nehru era?

Are there any issues on which the national bourgeoisie is in fundamental
conflict with the foreign bourgeoisie? Even if the national bourgeoisie has
welcomed the liberalization that has taken place so far, don't they still
welcome some kind of protection? As far as I understand, the WTO rules
permit "developing" countries to have higher tariff barriers on all
products than "developed" countries. Surely the Indian bourgeoisie wants to
keep its relatively protected "developing" status, doesn't it?

Is there a point after which liberalization can "go too far", such that the
"whole" national economy (if that's not an absurd abstraction) is actually
hurt by integration with international capitalism? I am thinking in
particular about the Chinese critics who say the PRC government has made
too many "liberalizing" concessions to the US in the WTO negotiations. One
of the US demands was that China be admitted to the WTO with the low tariff
limits required of a "developed" country, rather than accepting the market
protections allowed a "developing" country. As far as I understand, the US
and China met half-way on this issue, such that China was allowed more
protection than a developed country, but not as much as a developing one.

Henry,
If I understand your position correctly, like Ulhas' description of what is
going on in India today, you argue that China was able to substantially
increase its growth rate and GDP by integrating its economy with the world
capitalist system in the 1980s and 1990s. Although perhaps the Chinese case
is more complicated, because there were several processes going on at once:
the first was the deregulation of the internal Chinese economy and freeing
of Chinese capital, and the second was integration with the capitalist
world economy. This integration happened in two movements as well: first
was the opening of the US market to Chinese goods, which perhaps allowed
China to restructure an increasingly important sector of its economy toward
exports, and second was the more limited but gradually increasing opening
of the Chinese market to foreign capital and goods.

All of the above processes aided Chinese growth in the past 20 years.
During the last couple of years you have argued that the current economic
strategy of the Chinese government is mistaken. What have the mistakes been
with regard to integration with international capitalism, protection of
native industries, etc.? What do you think of China's entrance into the
WTO, and the conditions under which it is entering?

I don't think it would be mistaken to argue that China now has a national
bourgeoisie whose activities are relatively independent of direct state
control. Has this group become a "class for itself", in that we can see its
members articulating coherent "class conscious" positions with regard to
government policy? As far as I understand, both Chinese businesspeople and
the government are in favor of joining the WTO, although there must be some
businesspeople and officials who oppose the current terms of entry because
the industries that they are associated with will suffer. Presumably, the
government and business people support the WTO because they believe that
further integration with international capitalism will advance GDP growth
even more. What do you think of this?

Are there any issues on which the interests of the "whole" Chinese
bourgeoisie and international capital are in sharp contradiction--that is,
sharp enough that the contradiction does not just serve the helpful purpose
of causing each to become more competitive? Are there any signs of a
compradore bourgeoisie growing up in China?


Thanks,

Saul






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