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Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives. Jobs, debts, incomes, our own and those of our kids. I'm your host, Richard Wolff. Today's program is devoted to one huge subject, the People's Republic of China. China has become a very, very important part of our lives, and that is going to stay that way, if not become more so. People are asking me questions. People are talking about it. The President of the United States is bashing the country. There are lots of reasons to be interested in what is happening. It is the world's up and coming number one economy. It is scheduled within a decade to become a bigger player in the world economy than the United States, the first country to surpass the United States since the United States became the dominant player in the world economy. So I want to talk with you about China. I want to focus first on what China is. Where does it fit in the continuum between capitalism, socialism and communism? And then secondly, I want to talk more focusedly about the relationship between China and the United States as that plays itself out across our lifetime. So let's begin. One of the reasons I have to begin at the beginning, in a way, with China is because of an effect of the Cold War, that struggle between the United States and the Soviet Union that occupied most of the second half of the 20th century. One of the results, as often happens in wars hot and cold, is that the first casualty, as the slogan goes, is the truth. War makes people think and say things that aren't true because they hope one side or the other wins and. And the truth gets lost. And that happened with everything having to do with socialism and communism in the period from roughly 1945 to the end of the century. And for many Americans, for sure, it hasn't stopped yet. Let me give you some examples. Here's one that'll be relevant to China, too. That the Soviet Union represented a system that was opposed to private property, that got rid of private property, and that substituted public property or the government's ownership for private ownership. That was a nice story to tell because you could then say, gee, here in the United States we celebrate and protect private property, whereas in the Soviet Union they got rid of it. It's a nice story to tell, but it has nothing whatever to do with the truth. The Soviet Union, and this is important because of the education or miseducation, as you would have it, the Soviet Union never got rid of private property. That's simply not the case. Let me be more specific. In the immediate aftermath of the revolution. Back in 1917, one of the first acts of the new Soviet government was to divide the land. The land. Most of Russia was agricultural at the time, taken away from the huge landowners, carved up and given to individual farming families as their, you guessed it, private property. So that was the act of the revolution to give private property to the mass of rural people, since they were the vast majority. The following sentence is more people gained private property as a result of the revolution than ever had it before. So not only did they not get rid of private property, they expanded it. Okay, let's now go 10 years later, end of the 1920s, beginning of the 1930s, there is a collectivization of agriculture, a putting together by the government of many little farms into smaller, large farms. Most of those were collective farms, collections, groups of farmers were working together. But the land that they worked and the horses they used and the tractors they used were the private property of that collection of farmers. They were not the property of the government. Later on, state farms coexisted with private collective farms. But the notion that there was no private property in the means of production on agriculture is simply not true. Some of you may have heard that Lenin or Stalin, who took over after Lenin died, let the farmers have their own little private plots. They did. You know why? Because they had to. Because the farmers demanded their own. Here we go again. Private property, which Stalin had to give them because he would not have been able to govern the country without it. So he made a concession. And private plots, as they were called, were the norm in the Soviet Union's entire history. Which allows me to go to the second victim of the truth being lost in the Cold War. Here's the Russia had planning. The government planned everything. They didn't allow markets where people come and decide how much to give of tomatoes for a bushel of potatoes or whatever. That's also 100% false. Markets always existed in the Soviet Union. Always. Sometimes the markets were free in the sense that the Soviets allowed a buyer to come, a seller to come, and they negotiated what they would both agree to. And if they could agree, a transaction happened, and if they couldn't, it didn't. Free market. Many, many goods, particularly food, were handled in this way. Some markets were regulated, supervised. That's where the government planning comes in. They said, okay, you can have a market, but the price can't be more or less than this. It has to be this number or within this range. Just in case you don't remember, we have that in the United States too. We have a minimum wage. You can't pay a person for his or her labor less than a certain amount and we have maximum prices for things, etc. Etc. So the Soviet Union always had markets, always had private property. Why is that news for some of you? Because the casualty of the Cold War was the truth. Well, let's move on because there was a second lesson about the Soviet Union and the Cold War that leads us into the discussion of China. Toward the end of his life, Lenin, the first great leader of the Soviet Union, made a speech. And in that speech he described how he understood the new Soviet society that The Revolution of 1917 had brought into being. He referred to what they had as, and this is crucial, state capitalism. What did he mean? He said very we socialists have taken over the government. That's what the revolution accomplished. So now we have enterprises, some run by private enterprise owners, some run by the state. Okay? And that's good because we have the power of the government so we can move this society to where we as socialists want it to go. In other words, the state capitalism that they had socialists in charge of the government, but private and government owned enterprises underneath them. That was a transitional phase, that state capitalism. And it was now the government's job to move it forward to socialism proper. That was the old idea socialists had that capitalism was something fundamentally different from socialism. Well, what would then socialism be? Well, the word they used for that was communism. Communism is where we're going. They called their political party the Communist Party, not because they had a communism, they never claimed that. They said they wanted to get to communism, that socialism or this state capitalism, they moved between these two terms, Lenin himself, as almost synonyms, equals of one another. This is a transitional, temporary phase of our development. And the job of socialists is to move through the transition to get to where communism would exist. And what would that be? Well, Lenin never spelled it out. So let me. It's when you don't have employers and employees anymore, when you have made a community out of the workplace, a community in the sense that we're all equal. It's a democratic community that together decides what is going to be produced, how it's going to be produced, where it's going to be produced, and what we're going to do with the net revenue our production realizes. In other words, we run it as a democratic community the way we hopefully run a residential community only. This is a workplace community. That's what communism, which comes from the same root as community, that's what it means, a new economic system. No master, no slave, no lord. No serf, 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. And now here comes the big punchline that will lead us into discussing China, in my judgment, and I should mention for those of you that are interested, that some years ago my close friend and colleague Stephen Resnick and I published a book called Class Theory and Capitalism and Communism in the ussr. An entire book devoted to the detailed elaboration of what I can only summarize here, published in 2002 by Routledge Publishers in England and the United States. Class Theory and a detailed analysis of the state capitalism that constituted the Soviet Union. What happened in the Soviet Union was that the transition was never gone through. The way station of socialism on the way to communism was blocked. You couldn't get beyond it. When Stalin takes over at the end of the 1920s, Lenin dies as an aneurysm dies. 1923, when that happens, Stalin struggles, takes over, defeats Trotsky and the Soviet Union decides they're going to stay there. They can't make the further transition. They don't admit it in so many words, but that's what they do. They enshrine a system with the Communist Party in charge overseeing a network of enterprises mostly owned by the state, but many private, privately, in which the employeremployee relationship remains. It doesn't make the transition. It gets frozen, stalled, blocked in the position of state capitalism. And as you'll see after we make our break, that's where China's story begins. We've come to the end of the first part of today's show. Please remember to subscribe to our YouTube channel, follow us on Facebook, Twitter and Instagram, and be sure to visit democracyatwork.info, our website, to learn more about our shows, our unique co op store, and the two books we've published, Understanding Marxism and Understanding Socialism. Last but never least, a special thanks to our Patreon community whose invaluable support helps make this show possible. Stay with us. We'll be right back with a focused analysis on China. Welcome back, friends, to the second half of today's program devoted to the People's Republic of China. In the first half we talked briefly about the Soviet history that's relevant to understanding China. So let me jump right in at that point. China is like the Soviet Union in the specific way we focused on in the first half of the show, namely that China is a socialism that has not moved forward towards communism. It is stuck or stalled or blocked from making a further transition. In other words, like the Soviet Union, you have a group of socialists in charge of the government. The Communist Party of China took over the government in their revolution in 1949, just like the Russians did in 1917. And they preside over a system of public government owned enterprises and private citizen owned enterprises, just like in the Soviet Union. And they haven't moved further. They made some experiments back in the 1950s and 60s having to do with communes, but they put those aside and they have been a successful, what Lenin would call state capitalism ever since. There are some differences from the Soviet Union and they're worth pointing out. One, the Chinese made a decision to take advantage of the world economy and world trade in a way that the Russians did not. Probably because the Russians could not. They were isolated. The world was hostile towards this first socialist country. The Chinese didn't have that particular burden. And the Chinese have done very, very aggressively entering into the world economy. So the role of the world in the Chinese story is much greater than the role of the world in the Soviet story. And correspondingly, the Chinese did something else the Russians never did. They allowed the private capitalist sector to become much, much larger than the Russians ever did. So that for example, today huge parts of the Chinese economy are private capitalist enterprises, both Chinese, owned and operated by Chinese private citizens and by foreigners, Americans, British, Japanese, French, German and so on. So there are clear differences between the two. But their story as a socialist related to capitalism and communism is really very simple and very similar. They are societies where socialists made a revolution, set up a state capitalism, a domination of the state which was controlled by these socialists. They called themselves communists, both the Russians and the Chinese, because they wanted to make a transition. But they never did and they accepted the that they never did. One of the ways we know that is both of those societies run by a Communist Party never called themselves communist. 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. But it is very clear that they didn't call themselves communists. Never because they wanted to hold on to the notion that there was something more to socialism than the state capitalism which Lenin had the courage to call by its name, but was later changed to say, well, that's socialism. This transitional phase we haven't gone beyond. How does all this impact the relationship between China and, and the United States? Well, besides all the confusion here in the United States as to where China fits In the capitalism, socialism, communism, continuity, that range, we have a unique relationship problem between these two countries. China is clearly an ascending, rising economic, political and cultural power in the world. No one should be confused on that subject. In stark contrast, the United States is a descending power. That is, the footprint of the United States is smaller in the world economy. With each passing year, the heyday, the dominance of the United States is shrinking and the economic, political and cultural role of China is rising. And that has always, in the history of the world, and particularly the history of capitalism, been a big problem. I'm going to come back to that in a couple of minutes, but I want to show you that there are also similarities between China and the United States. Let me explain it this. In China, you could divide the society into three parts. At the top is the Communist Party and the government it clearly controls. Underneath that are the private and publicly owned enterprises, the things that make the economy run, and at the bottom, the working class. And it's been the job of the government and the political party that run everything at the top to make all this work out, to make sure that the mass of the working class is educated, disciplined, to work for the enterprises, foreign and domestic. They've been very successful at that. It's also been their job to make the mass of people support the system, generally favor it, be willing to elect those people to office that they elect in the party, in the government, and to work and to accept the decisions made. And they've been successful at that. The United States can also be divided into three very similar parts, but it's the relationship among the parts that's a little different. In the United States, what's at the top are private capitalist enterprises, the big businesses that we all know 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. It's been the job of the politicians and the government to keep all this working. And they have done a middling job of that. That's why this country is descending and the Chinese are ascending their government at the top. Party and government mobilizing have proven themselves able to do things that the slightly different system, private enterprise on top, party government in the middle, mass of workers at the bottom, haven't been so successful at. Let me give you some examples, because they're really important. 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. That's why the Chinese are now the only rival to the United States and the European Union and becoming more powerful as a rival literally every month. So they've managed a faster economic growth. But that's not all. They've been better able to mobilize society to solve key social problems. One of them we're living through right now, the coronavirus pandemic. Look at the difference between the Chinese focus on closing down Wuhan and closing down the province of which Wuhan was a capital, really crunching down on this virus so it didn't spread, versus the United States, whose parties and government bicker and delay and stall and can't mobilize anything comparable. So that we have here in the United States 4% of the world's population and 25% of the world's corona cases and corona deaths. They've been better able to handle that kind of emergency with their system. And they've also been able to undertake enormous decisions the likes of which we haven't. They committed themselves 20 years ago to develop their infrastructure, Their roads, their highways, their trains, their cities, their apartment buildings. They have been so successful, they build in advance of the demand. They have whole cities fully equipped with transportation buildings that are empty. These are not failures. These are intentional making the materials available for the country to grow into. Extraordinary achievement. We don't have that. They committed themselves to become less dependent on world trade and more focused on their own domestic economy. And they've made enormous strides. And they wanted to focus their energies to not be destroyed by the crash of 2008 and then again by the crash of 2020. And they have gotten through those economic crashes better again than the United States. Here is an irony to consider. Part of the movement towards strong power governments. The. The kind of thing Donald Trump imagines he could become is, in its way, a backwards, upside down recognition that the kinds of social organization that the Chinese have put into place are what other countries need to learn from the kind of person Mr. Trump is, the kind of party the Republicans are, Could never admit what I just said. So I'll do them a favor and explain that they are less the competitors and more the wannabes of this world. There are two ways forward now, as there were before. The United States and China can, and I say this with all seriousness, can end up going to war against each other, each with their nuclear weapons, and we could all be gone if and when that happens. And make no mistake, there are historical precedents for this. One of the reasons we had World Wars I and 2 in the 20th century was because up and coming powers, Germany, Japan, in particular, threatened the dominance of what had been the dominant Britain, France and its ally, the United States. And war twice killing tens of millions of people and destroying huge parts of the world, were the price paid for the struggle between an ascending and a descending power. So could that happen again? You bet. But there is an alternative, and the alternative is to understand that we could learn from each other's strengths and weaknesses. The Chinese have both, and so do the United States. And an exchange of information, an exchange of products, an exchange of technologies could make both societies continue the prosperous coexistence that characterized the last 30 years. And could continue. But we would have to recognize it. Finally, there's another option that none of the above have considered, that a movement could develop both here in the west and in China to do what I have been telling you is the theme of this entire program, to finish that transition, to finally take society beyond the employer employee relationship of private capitalism, of state capitalism, and of that block transition that constitutes what socialism has been in our lifetimes. 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. This is Richard Wolff for Democracy at Work. Thank you for your attention, and I look forward to speaking with you again next week.