Podcast Summary: Economic Update with Richard D. Wolff

Episode Title: China: Capitalist, Socialist, or What?
Date: August 20, 2020
Host: Richard D. Wolff, Democracy at Work

Episode Overview

In this episode of Economic Update, Richard D. Wolff explores the perplexing question: What is China’s economic system? Is it capitalist, socialist, communist, or some blend? Wolff draws from history, Marxist theory, and contemporary developments to clarify how China is navigating the terrain between capitalism and socialism. The episode also considers how China’s rise impacts its complex relationship with the United States, and what lessons each country might draw from the other’s system.

Key Discussion Points & Insights

1. Misconceptions from the Cold War

• Cold War Distortions: Wolff begins by emphasizing how the Cold War led to widespread misconceptions in the West about socialism and communism ([01:20]).

  • Quote: “The first casualty, as the slogan goes, is the truth...that happened with everything having to do with socialism and communism” (01:33).

• Private Property in the Soviet Union: Contrary to common belief, the Soviet Union maintained forms of private property and markets.

  • After the 1917 revolution, land was redistributed to individual farming families as private property.
  • Collectivization in the late 1920s and ’30s created collective farms, but these were owned collectively by the farmers, not the state outright.
  • Quote: “The Soviet Union never got rid of private property. That’s simply not the case.” (03:18)

• Markets in the USSR: Different forms of markets, both free and regulated, always existed in the USSR.

  • Quote: “Markets always existed in the Soviet Union. Always.” (07:45)

2. Clarifying Terms: State Capitalism, Socialism, and Communism

• Transitional Periods:

  • Wolff explains Lenin’s concept of "state capitalism," a system with socialist control of the state but a mix of private and public enterprises—seen as a transitional stage toward socialism and ultimately communism ([10:43]).
  • Quote: “State capitalism: socialists in charge of the government, but private and government-owned enterprises underneath them. That was a transitional phase” (11:15).

• Defining Communism:

  • Communism, for Marxist theory and Lenin, implies abolishing the employer-employee relationship: a democratic, community-controlled workplace.
  • Quote: “No employer, no employee. We are a community working together. That’s what we call communism and that’s where we’re going. Socialism is just an in-between transitional phase.” (13:46)

• Why the Transition Never Finished:

  • The USSR, under Stalin, never moved past this transitional “state capitalism.”
  • Wolff references his own scholarship on how socialism in the Soviet Union became "blocked" at this transitional stage and never attained true communism ([15:17]).

3. China: Parallel to Soviet History, but Different Choices

• China’s Post-1949 Path:

  • Like the Soviet Union, China’s Communist Party seized control of the state and established a system of public (government-owned) and private enterprises.
  • China experimented with communes (1950s–60s) but ultimately maintained and greatly expanded its state capitalist model ([21:33]).

• Key Distinctions from the USSR:

  • Engagement with the World Economy: China entered global trade aggressively, while the USSR was largely isolated.
  • Expansion of Private Capitalist Sector: Chinese private enterprise, both domestic and foreign-owned, is much larger than what existed in the USSR ([23:43]).
  • Quote: “Huge parts of the Chinese economy are private capitalist enterprises, both Chinese...and by foreigners” (24:54).

• On Labels:

  • Wolff criticizes the Western tendency to label China and the USSR as “communist,” emphasizing that neither country reached communism as defined by Marxist theory ([26:00]).
  • Quote: “Calling Russia and China ‘communist’ is something that was done in the West by people who didn’t know or care what the difference between socialism and communism might be.” (26:39)

4. The China–United States Relationship: Ascendance vs. Decline

• Contrasting Structures:

  • China: Communist Party/government at the top, enterprises (public/private) in the middle, working class at the bottom.
  • US: Private capitalist enterprises on top, parties and government controlled by business underneath, then the working class.
  • Quote: “In the United States…the private capitalist enterprises...run this society. Underneath them are the parties and the governments that they control. And then at the bottom again, the mass of the working class” (30:30).

• Different System Effectiveness:

  • China has outperformed the US in economic growth and crisis management (e.g., infrastructure development, COVID-19 response).
  • Quote: “Over the last 30 years, the Chinese system has grown much faster economically than the United States. Two to three times faster. It’s not even close.” (32:38)
  • On COVID-19, Wolff contrasts China’s quick lockdowns with the US’s disorganized response ([33:50]).
  • Quote: “We have here in the United States 4% of the world’s population and 25% of the world’s corona cases and corona deaths.” (34:59)

• Risk of Conflict:

  • Wolff warns of the historical danger when rising and declining powers collide, citing the causes of World Wars I and II ([37:19]).
  • Quote: “...an up-and-coming power threatened the dominance of...the dominant...and war twice killing tens of millions...were the price paid for the struggle between an ascending and a descending power.” (38:16)

5. Paths Forward: Conflict or Mutual Learning (and True Socialist Transition)

• Coexistence or Catastrophe:

  • The US and China could head toward war or could choose to cooperate, learn from each other's strengths, and prosper together.
  • Quote: “The alternative is to understand...we could learn from each other’s strengths and weaknesses...” (39:18)

• A New Transition?

  • Wolff closes by proposing a movement beyond both forms of capitalism (private and state), aiming to finally realize socialism’s promise by transcending the employer-employee relationship.
  • Quote: “Maybe now we can finish the transition, go to something better than capitalism, now that it’s so clear that it leaves plenty to be desired.” (40:10)

Notable Quotes & Memorable Moments

• “The first casualty, as the slogan goes, is the truth…that happened with everything having to do with socialism and communism.” (01:33)
• “The Soviet Union never got rid of private property. That’s simply not the case.” (03:18)
• “Markets always existed in the Soviet Union. Always.” (07:45)
• “State capitalism: socialists in charge of the government, but private and government-owned enterprises underneath them. That was a transitional phase…” (11:15)
• “No employer, no employee. We are a community working together. That’s what we call communism and that’s where we’re going.” (13:46)
• “Huge parts of the Chinese economy are private capitalist enterprises, both Chinese...and by foreigners.” (24:54)
• “Calling Russia and China ‘communist’ is something that was done in the West by people who didn’t know or care what the difference between socialism and communism might be.” (26:39)
• “Over the last 30 years, the Chinese system has grown much faster economically than the United States. Two to three times faster. It’s not even close.” (32:38)
• “We have here in the United States 4% of the world’s population and 25% of the world’s corona cases and corona deaths.” (34:59)
• “...war twice killing tens of millions...were the price paid for the struggle between an ascending and a descending power.” (38:16)
• “Maybe now we can finish the transition, go to something better than capitalism, now that it’s so clear that it leaves plenty to be desired.” (40:10)

Timestamps for Key Segments

• [01:20] — Cold War distortions about socialism and communism
• [03:18] — Myths about private property in the Soviet Union
• [07:45] — The persistence of markets in the USSR
• [10:43–13:46] — Defining state capitalism, socialism, and communism
• [15:17] — Stalin’s halt of the transition to communism
• [21:33–24:54] — China’s adoption of state capitalism and embrace of markets/private enterprise
• [26:00] — The confusion over “communist” terminology
• [30:30] — Analogy: Social structures of China and the U.S.
• [32:38] — China’s rapid economic growth and crisis management
• [37:19–38:16] — The risk of conflict from shifting global power
• [39:18–40:10] — Alternatives: learning from each other or finally surpassing capitalism

Conclusion

Richard D. Wolff’s episode provides an accessible, theory-driven, and historically grounded analysis of China’s economic system, debunking persistent myths and clarifying nuanced distinctions. The discussion highlights the dangers inherent in shifting global power, but also points toward the possibility—not yet realized, but necessary—of transforming existing systems to move genuinely “beyond capitalism.”

This summary condenses the substance of the episode, capturing Wolff’s language and tone, and pinpoints the essential arguments and evidence for listeners new to the conversation around China’s role in the world economy.