[Marxism] State owned enterprises in China spearhead capitalistreal estate development

Michael Karadjis mkaradjis at hn.vnn.vn
Tue Aug 3 10:26:12 MDT 2010

----- Original Message ----- 
From: "Shane Mage" <shmage at pipeline.com>
> On Aug 2, 2010, at 1:15 PM, Michael Karadjis wrote:
>> ...By definiton, therefore, a share company, even with a state
>> majority of
>> shares, is no longer a company that can perform any role other than
>> operating to maximise profit. If the state majority did try to use 
>> the
>> company in a different way, the investors would pull out, defeating
>> the
>> alleged purpose...
> (2) How can investors *as a group* (not as individuals) "pull out?"
> They can't just sell their equity shares because that would merely
> replace them with other investors.

I'm not sure what you mean "as a group" rather than as individuals, I 
guess each investor or investing firm makes its own decision 
"individually." But I take the point that I may have been a bit dramatic 
in saying they can just "pull out" at the drop of a hat. It is true that 
they would have to sell their shares, and if the reason for wanting out 
was that the state-owned majority share-holder decided (in a most 
unilkely scenario) to suddenly start re-engaging in some non-profit, 
socially-beneficial activity, then you're right that other capitalists 
would have to want to buy in.

But the broader point remains for exactly that reason. Of course, I said 
the above rhetorically, because I don't think the Chinese state has any 
intention of using its majority shares in the ex-state companies it has 
turned into share companies for non-profit purposes. I don't think they 
have a secret plan up their sleeve to suddenly impose this on unwitting 
capitalist investors who have bought in under the impression that they 
were going to make bucket-loads of profit. On the contrary, turning an 
SOE into a share company means the drive for profit becomes supreme, and 
the "state-capitalist" element of the share company is as driven by 
profit as its private partners. The article about the grotesque rush 
into "real estate" and other rubbish makes that clear enough. It would 
have to be both an extremely edicated and extremely powerful socialist 
party at the centre that can pull these free-lancing "state" managers 
back once they get their hands on cash of that size, and I don't that's 
the CCP.

But hypothetically again, let's say the secret plan existed. So the 
state majority share-holder (ie, in those equitised ex-SOEs where the 
stat remains the majority - by no means all or most) suddenly decides to 
turn on its private partners once they've sucked them in and impose on 
them, let's say, price controls on basic products, subsidies to poor 
regions, massive social policies etc, so that profit rates for 
shareholders crash. So maybe those investors have difficulty pulling 
out. But then which other investors will buy in to another 
state-majority share company if they see that happen - thus again, 
defeating the purpose.

Just to clarify, we're talking here about a state company being turned 
into a "joint-stock" company, ie a share company with private 
shareholders, not about a "joint venture" between (what remains) an 
entirely state-owned comapny and a private company for a specific 
project, eg, oil exploration.

Nor can they starve the company of
> new capital were it to be needed, unless long-term investors (pension
> funds above all) were subverted by finance-capital (as in the US) to
> calculate short-term instead of providing for the pensions when they
> become due (twenty years on average, given a forty-year working life
> for their beneficiaries).

Same as above, but just on pension funds etc, I'm not assuming they are 
necessarily the main kinds of investors into equitised ex-state firms. 
Lots of straight out capitalists are involved too, and foreign 
capitalists, and very often the ex-state managers. 

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