[Marxism] Interesting China article

S. Artesian sartesian at earthlink.net
Sat Sep 5 07:46:23 MDT 2009

Apropos of the Soviet economy PRIOR to Perestroika/Glasnost... from  The 
Economic Development of the USSR by Roger Munting [1982]:
--Summary [of the late 1970s, to year 1980]

"The exploitation of the natural resources of Siberia and he far east [with 
80 percent of the fuel reserves] is necessary to meet the energy needs of 
the economy and provide vital foreign exchange.  Ironically in order to 
develop these resources quickly imported technology [particularly Japanese] 
is required-- there being a direct oil-for-technology exchange.  No doubt, 
exploitation and development could proceed without knowledge and equipment 
imported from capitalist countries, but it would be slower.

Technological innovation has gone ahead at a faster rate in the capitalist 
world than within the USSR.  In particular, the USA has been a fountain of 
technology and the capitalist market, and the international companies in 
particular, have enable new technology to be spread about the world.  Some 
technological shortcomings may be one reason for the continued relative 
inefficiency of Soviet production.

To secure Western technology the USSR in the 1970s became increasingly 
indebted to the Western banks and governments.  While its credit has 
remained sound, the need to service such debts has in turn imposed further 
demands on the economy and in particular on the extraction of oil and other 
resources.  In 1976, 22 percent of hard currency earnings were required for 
interest and amortization payments, and this at a time when, because of 
rising oil prices, the terms of trade have never been more favorable.

One of the problems long evident in the Soviet economy has been its chronic 
inefficiency; reforms have not yet overcome the lags and transformed 
extensive productive techniques [based on increases in the proportions of 
labor power applied] into intensive [based on the substitution of machinery, 
thus amplifying the productivity of labor].  Low maintenance standards and 
long-neglected infrastructure investment in the past have meant that much 
investment has been needed for replacement rather than a net addition to 
capital stock.  The scarcity of productive capital has been further 
exacerbated by the conflicting demands between the high costs of armaments, 
the huge costs of opening up new areas and resources and the increasing 
production of consumer goods.  The 'problems' of the modern economy have not 
been absolute: growth has continued, consumption has improved.  Rather the 
economy has failed to meet the expectations of the country and the political 
leadership, both in the particular-- the plan forecasts [the ninth 5 year 
plan being particularly disappointing]-- and in the general.  In November 
1979 President Brezhnev made public criticisms at the failure to meet plan 
figures...... not only were consumer goods in short supply but even coal and 
oil, and, as ever, meat.  Plan targets for 1980 were reduced because of the 
very porr overall showing of industry in 1979.  The output of many basic 
industries showed an absolute fall.  As well as coal, steel production 
fell.... The superiority of the Soveit system in providing plenty, which had 
been the expectation of central planning remained unproven at the end of the 

Now I bring this up not because I take any pleasure in the difficulties of 
central planning in the USSR-- I don't.  I consider the Russian Revolution 
to be the greatest single event in all of human history. And I don't bring 
this up because I was a partisan of Gorbachev.. or Yeltsin.  I was not.  I 
consider the collapse of the USSR the greatest single defeat for human 
emancipation since the decapitation of the revolutionary wave that ran 
through Europe and Asia in the 1920s and 1930s.

I bring this up because these difficulties of central planning, the 
"erosion" so to speak of the remnants of the Russian Revolution, took place 
prior to Gorbachev, took place in fact while the same property relations 
that dominated the economy during what Dogan and George probably consider 
the halcyon period, if not the golden age, at least the rising period of the 
Soviet state.  The very same property relations created, or supported, or 
evolved into the terms of their own inadequacy.  And Gorbachev with his 
"opening" did not just drop from the sky as some mole, some sleeper cell, 
some great traitor activated by the bourgeoisie when the time was right. 
The above listed failures of the Soviet economy are the backdrop, and the 
reason, for Gorbachev's ascent.

Now we can say China has been more astute than the USSR:-- In adopting an 
explicit cheap labor policy, encouraging foreign investors to "enrich 
themselves," in demanding FDI rather than loans,   in removing labor 
protections and denying even a legal status to migrant workers, the CCP has 
avoided the corrosive affects of international debt to the capitalist 

Nevertheless the central planning, and the property relations that both 
Dogan and George find as critical and superior to that of modern capitalism 
proved inadequate in the case of the USSR.

Which gets us right back to the NEP to which Tetsuzo likes to compare the 
Chinese adaptation, and embrace, of foreign and domestic capitalism.   The 
NEP represented quite clearly to Lenin a tactical retreat, a necessary 
retreat brought about by the devastation of the civil war.  At an earlier 
point in the then public debates about the Soviet economy, an accusation was 
made [I think by a Left Social Revolutionary] that the Bolsheviks had 
instituted "state capitalism."  Lenin replied [perhaps wistfully] that 
"state capitalism" would be an improvement, an advance for the Soviet 
economy, describing the status of the economy as that of a "petty producer 
state."    In that regard, there was no alternative to the NEP, and its 
adoption represented an "advance" not over socialism, not over planning, but 
over the petty producer mode that dominated the Soviet economy.  It was a 
tactical retreat.  And how was this retreat to be reversed?  Clearly, it 
would not reverse itself.  Clearly, there was a risk of creating a 
proto-bourgeoisie, of the development of the USSR stimulating private 
property and eroding social property.  Clearly, also, based on everything we 
know about Lenin's life, Lenin's work, the reversal, the resolution of the 
conflicts created by this uneven and combined development/retreat of the 
Soviet economy, required the advance and success of the proletarian 
revolution in the advanced countries of Europe and the Americas.  Without 
that, the course of the NEP, and even its violent abrogation, would make the 
USSR more vulnerable, more permeable to capitalism-- something proven 
violently, with a bang, by WW2; and tragically, in the collapse, with not 
only whimpers but howls, in 1991.

There are many "interesting China articles" out there, not the least 
interesting an article in the Financial Times of August 25, 2009, about 
China's overproduction of fixed assets, about the amount of stimulus money 
that has found its way into the stock and real estate markets [based on 
estimates, and frankly, speculation since Chinese statistics can be pretty 
opaque].  What is less speculative is this:

"The fiscal and monetary policy response to the crisis has mostly benefited 
the largest enterprises and biggest projects," Wang Yijiang, professor of 
economics and human resources management at the Cheung Kong Graduate School 
of Business in Beijing.  "The small and medium sized enterprise sector 
provides 75 percent of the jobs to China's urban workforce but it is 
shrining for the first time in 30 years of economic reforms."

That contraction is of course part and parcel of the previous expansion 
based on "market reforms," which means profitability of the "market economy 
under socialism."  The stimulus and recovery in China has been based 
exclusively on a gigantic, rapid increase in loan volumes.  In 2007 or 2008, 
I believe the "private sector" output exceeded that of the state sector. 
Profitability has driven both sectors for sometime.  Profitability declines, 
if they continue, means repayment of those loans will be questionable.  That 
is exactly what happened in the west beginning in 2007.

What we have right now in China is not the demonstration of the 
"superiority" of a "communist economy," but the creation of an financial and 
asset bubble.


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