Critique of Michael Roberts: on China’s Socialist Transition
China is now at the center of the world. The biggest economy in terms of industrial output, the largest manufacturer, and its population as measured by purchasing power parity, or PPP, (how much of the real wage does a McDonald’s burger cost) is already at a higher living standard than the USA. By every economic metric it is the only major power that has grown economically by more than 5% a year in the 21st century. How do we explain this? For most Marxists there are two basic positions – China is either capitalist or socialist. Some however, argue that it is undergoing some intermediary ‘transitional’ position between them. The transition option is used by those who want to reject the reality that China is an imperialist world power, and keep alive the dream that it has some progressive, pro-socialist characteristics. In this case China’s growth must be explained not by its restoration of capitalism which is globally in decline but by its ‘transition’ to socialism.
Foremost among those who argue China is undergoing a ‘transition’ is Michael Roberts the British based Marxist well known for his defence of Marxist economics and the law of value, most notably against Michael Heinrich, (see In Defence of the Labour Theory of Value). He has also defended Marx’s key law of the tendency of the rate of profit to fall, the LTRPF, against David Harvey, who rejects it as the necessary cause of crises of overproduction, and ultimately setting the historical limits of the capitalist mode of production. Roberts’ defence places him directly in the tradition of Marx for whom value is the product of social labour, and the LTRPF the expression of the ultimate contradiction – the class struggle between the proletariat to retain the labour value it produces, and of the capitalist ruling class to extract surplus labour value.
However, the class struggle is not only over the rate of exploitation during the production of value. It is mediated by the state which rules on behalf of the ruling class to reproduce these exploitative class relations. To understand China today we have to determine for which class does the state rule. Transition in the historical context of China’s revolution can only be from the rule of capital to the rule of labour. The transition ends when the law of value as the basis for setting prices of production in the world market is replaced by the workers’ plan which sets prices based on social labour time. Roberts however, argues that the ‘transition’ to socialist planning was ‘trapped’ after the state opened up to the market from the late 1970s, because the Law of Value (LOV) is as yet not ‘dominant’ in the state.
So for Roberts there was no transition back to capitalism because the state could ‘manage’ the LOV so that it did not ‘dominate’ the economy. We argue that Roberts arrives at his conclusion by confusing levels of analysis. Marx’s abstract model of capitalism where the state is left out of the picture is superimposed on the real world of 21st C state monopoly capitalism. Roberts claims the state intervenes in the market to suppress the domination of the LOV when its actual role is to manage the LOV on behalf of the capitalist ruling class. How is this different from the rest of the monopoly capitalist states in the epoch of imperialism? We will show that since 1992 when the CPC decided to reintroduce the LOV to set the prices of production within the global economy, it has become a monopoly capitalist state, and that particular historical circumstances (many historical determinations) drove it to become imperialist. To make the transition from monopoly state imperialism today we need a socialist revolution that will expropriate all capital (‘public’ and ‘private’) and develop the conditions necessary to build socialism, the first stage of communism, which in ending class society, and therefore the state, will usher in communism itself.
No workers’ revolution means no socialism
We say that there is no evidence that China was or is socialist. China did not have a workers’ revolution which is the necessary condition for socialism. The revolution in 1949 was a peasant revolution led by a Stalinist party comprised of bureaucrats modeled on the degenerated revolution in the USSR after 1924 when the bureaucracy aligned with the peasantry and advocated a ‘bloc of four classes’, workers, peasants, petty bourgeoisie and bourgeoisie. The CPC took power after it defeated the bourgeois nationalist forces of the KMT which fled to Formosa (Taiwan). In that event the revolution was based on an alliance of only two classes, the peasants and the petty bourgeoisie. Trotsky had anticipated the possibility that such a petty bourgeois revolution, led by Stalinists based on the peasantry, would find it had to go further than it intended and expropriate the bourgeoisie, leading the bourgeois democratic revolution itself.
In fact Trotsky had already been proven right. It had happened in Eastern Europe after 1945 when Stalin’s plans to form popular fronts (the ‘bloc of four classes’) with the national bourgeoisies fell through as they all reneged on such a bloc as soon as the Cold War iron curtain came down. For those who understood Trotsky on Ukraine, these states became extensions of the Stalinist USSR where the bourgeoisies were expropriated by the bureaucracy rather than the workers. They were therefore characterized as deformed-at-birth workers’ states in defence of workers’ property.
Was the situation in Eastern Europe analogous to the Chinese Revolution? We say yes. In both cases the bourgeoisie decamped to join the Cold War and the Stalinist bureaucracies had no option but to nationalise private property as state property. The Chinese revolution was also deformed at birth as workers’ played no role in the revolution having been suppressed since the counterrevolution when the KMT liquidated the CPC leadership in 1927. So what resulted in 1949 was a petty bourgeois bureaucratic revolution that by 1951 was forced to expropriate the bourgeoisie, at the same time making sure the working class played no active role in the advance of the revolution towards socialism.
The petty bourgeois bureaucracy held state power balancing between the only two classes that could act as the ruling class – either the bourgeoisie or the working class. The petty bourgeoisie was a class intermediate between the two capitalist classes – the proletariat and bourgeoisie, which were locked in a class struggle over the production of value. The bureaucratic state was neither capitalist, nor socialist, but rather a ‘transitional’ state in which the petty bourgeoisie had to return to capitalist rule or go forward to proletarian rule. Resolving this class transition was pressing given the new state had to solve the dilemma of restoring capitalism without succumbing to recolonisation by imperialism.
Therefore, as a petty bourgeois formation the state bureaucracy had an interest in administering the state to advance and consolidate its power by becoming the new national bourgeoisie. This would involve restoring capitalist social relations ruled by a ‘socialist state’. The CPC at the head of the bureaucracy decided to do this gradually in the name of “Socialism with Chinese Characteristics”. The decision became more urgent as the bureaucratic plan which suppressed workers’ democratic participation failed to raise productivity and the economy began to stagnate.
CPC restores capitalism
Within the CPC the Maoist faction campaigned to enforce greater worker productivity in the name of the revolution. This campaign was a disaster that led to mass famine. By 1978 further stagnation in the economy prompted a rival faction around Deng to call for a return to capitalist market forces – that is, the LOV – to set the prices of production as the basis of market exchange. However this would only work if China re-joined the world market in which world prices would guide the application of the LOV. Labour-power would become a commodity in the market and socially-necessary labour-time would be the economic measure of value and surplus-value (or profits). This in turn would set the prices of production which included the share of profits.
In 1992 the 14th Congress took the decision to allow the LOV to set prices in the whole economy including the state owned sector to increase labour productivity. The rule of the LOV was carefully managed. Private investment in production on the land and in industry was now allowed subject to capital controls which restricted private trade and investment abroad. More importantly, tariff free economic zones for Foreign Direct Investment (FDI) were now established within strict limits including the requirement of joint ownership to prevent foreign takeovers, and the transfer of intellectual property to allow China to develop the forces of production.
For Marxists who recognize the LOV as determinant under capitalism, the CPC decision in 1992 is the qualitative point at which capitalism was restored in China. The bureaucracy led by the CPC was now converted from its role in the state as an intermediary bureaucracy serving the petty bourgeoisie, into a new ruling capitalist class serving collective capitalism. This ended the period of ‘transition’ from a Stalinist-led peasant revolution forced to expropriate the Chinese bourgeoisie, to a bourgeois counter-revolution that restores the national bourgeoisie. Everything the bureaucracy had done over this transitional period in the name of ‘socialism’ was to create the conditions for the restoration of capitalism. This was managed within the framework of a state controlled by the Stalinist CPC presenting the return of capitalism as a ‘bloc of four classes’ as a necessary condition for socialism.
Of course, there have been many attempts to insert extraneous conceptions of China to explain its capitalist growth as some ‘exceptional’ aspect of its ‘transition’ to socialism. As we have seen, Michael Roberts claims that while China has established a capitalist market, its growth is not explained by market forces as such, but by the state which does not represent the private capitalists. He argues that the state sector of the economy plans production for use and not profit. The private sector exhibits the usual laws of motion of rising and falling profits typical of the capitalist world market while the ‘public sector’ can escape those laws. What is ‘exceptional’ is its ability to avoid the ‘domination’ of the LOV and create a surplus that is not distributed as profits to private owners, but accumulated as a sovereign fund. This enables China to subsidise the production of commodities more cheaply than its capitalist rivals and at the same time make millions of workers ‘middle class’.
This claim is therefore a sort of ‘Marxist’ variant of US propaganda that calls China a ‘cheat’ in under pricing its exports (and therefore its currency) and massively underwriting the infrastructure and development of its many, and growing, economic partners. Only the authoritarian CPC can manipulate prices of production by intervening in the private market. For Roberts, so long as the state is not formally ‘dominated’ by the market, this is a good thing. It shows that something progressive has emerged from the legacy of the peasant revolution that may contribute to the transition to socialism. What needs to happen is that workers have to progressively impose workers’ democracy on the CPC to socialise planning and ‘dominate’ the LOV! If we were to extend such reformist dreams from China to the BRICS+ then ‘win win’ economics can spread across the globe creating a wave of new middle classes, and the transition to international socialism can be completed on the installment plan.
From the ‘abstract’ Capital to the ‘concrete’ real world
But how can a state which is so influential in re-establishing and regulating the LOV in the market not be ‘dominated’ by the LOV which operates as the determinant of prices in the global market? How is it possible for a nation state not to be fully integrated in capitalist production of value and surplus value when it contributes to the prices of production of everything that China produces globally up and down the value chains? As we noted, Roberts’ claims the state does not produce profits because profits can only accrue to the private owners of capital.
For Marx, ‘capital’ could only exist in the form of different capitals; otherwise, there was no more compulsion to accumulate. Consequently, capital could only exist in the form of ‘different capitalists’, that is, a social class constituted so that each part of it was, by compelling economic interest, tied to the survival of ‘its’ own unit of production or circulation. Consequently the ‘thirst for profit’ of each part of that class and the ‘drive to capital accumulation’ are identical, the second one being only realizable through the first (the attempt at profit maximization of each unit or firm). If there is no competition, and the allocation of resources are not left to the decisions of individual capitals and the ‘invisible hand’ of the market’, then there is no capitalism. Capital cannot exist as one capital, the state. (Carchedi and Roberts, 2023, 219)
Roberts fails to translate the level of abstraction of Marx’s three volumes of Capital (and the ‘Fourth’ on Theories of Surplus Value) to the real world. The real world comprises concrete social relations that are the result of ‘many determinations’ originating from the operation of the laws of motion. Prices of production which assumed the ‘free competition’ and averaging out of the profit rate that Marx used to demonstrate the operation of the LOV in the circuit of capital was never intended to correspond to the concrete reality of capitalist development. The working out of prices of production in the real world are NOT determined by an abstract market, but by the class struggle in which theory is subjected to practice.
John Smith in his Imperialism in the 21st Century has a useful discussion of how Marx’s method anticipated the way the LOV works in the epoch of imperialism. (224-251) Production of value requires the exploitation of labour, as Capital demonstrates, but due to the monopoly ownership of capital its distribution is now characterised by super-exploitation where wages are paid below their value. That is, the value of labour power as a commodity with a use-value to produce surplus value is determined by a class struggle in which monopoly capital can exercise power over labour power to set its price and extract super-profits.
In fact, we argue that in the real world competition has never been free from the intervention of state power in service of corporations. From its inception to its decline and decay the capitalist state has always played the role of manager and broker in establishing and maintaining the production and circulation of capital. Originating in genocidal wars against pre-capitalist peoples to extract rent from privatised property, its epoch of decay ends in more genocidal wars over land and rent, so that production becomes parasitism where monopoly rents accrue to corporate warlords who monopolise production, distribution and exchange.
Roberts, by projecting Marx’s abstract level of analysis in Capital onto the actually existing world in which the state is the overseer and regulator of the LOV, is blind to the rise of state monopoly capitalism in the transition from so-called ‘competitive’ capitalism in the 19thC to monopoly state capitalism in the 20thC.
“Moreover the view that the likes of China and Vietnam are a new form of capitalism, ‘state capitalism’, suggests that world capitalism is now today stronger than it ever was before in history. Alongside the decline of the imperialist powers, state capitalism has apparently a new and sensational phase of the development of the productive forces, in a backward country like China, and thus much more impressive even than anything Marx described for 19th century capitalism. (Carchedi and Roberts 2023, 218)
What is State Capitalism?
Roberts’ method applies abstract assumptions to arrive at his ahistorical conclusions. A ‘new form’ of state capitalism in China arising out of the deformed workers’ state cannot be dismissed until it has been put to the test of ‘many historical determinations’ that make up that history. First, China after 1949 was not (on Roberts’ own figures) a backward country relative to the GDP growth of capitalist semi-colonies, keeping pace with the South Korean ‘tiger’ and well ahead of India. Marxists agree that state planning in the degenerated or deformed workers states, despite the limits imposed by bureaucratic planning, generally allowed the forces of production to develop beyond the semi-colonial world. Second, let’s identify the historically specific conditions that allowed China to restore capitalism as a new ‘state capitalism’ in the late 20th century and launch a ‘sensational phase of development’ despite the decline of world imperialism. We argue that the CPC took the decision to restore capitalism in 1992 and on the basis of its historic legacy of deformed state planning combined with the prevailing late capitalist development of state monopoly capitalism in the world economy.
To explain this development we need to understand the role of state monopoly capitalism over the last century or so. Before we do that we need to say what ‘state capitalism’ is. The first case is ‘state capitalism’ was used by Lenin to explain the necessity of using market forces (the LOV) to determine prices in Russia under the New Economic Policy in the attempt to solve the ‘scissors crisis’. Lenin explained that this was ‘state capitalism’ to counter the charges that Soviet Russia was restoring capitalism. Far from it, prices of production set by the market were ‘dominated’ by a healthy workers’ state which had not yet degenerated under the Stalinist bureaucracy. The struggle of the Left Opposition against this bureaucratic degeneration called for the defence of workers’ democracy to ensure workers’ control of the state. These historic conditions never existed in China and bear no resemblance to state monopoly capitalism today!
Second, we agree with Trotsky (see Carchedi and Roberts footnote 21 p256) in giving no credence to the renegades of Trotskyism who abused his name while he was still alive by claiming that ‘state capitalism’ had been restored in the Soviet Union between 1929 and 1939. Workers’ property in Russia was the legacy of a workers’ revolution and the bureaucracy was forced to defend that property rather than the LOV. Trotsky denounced those who refused the unconditional defence of the SU claiming that capitalism was restored when workers’ property was still being defended against the LOV. We argue with Lenin that no scientific concept of ‘state capitalism’ exists outside the reality of State Monopoly Capitalism.
State Monopoly Capitalism
Trotsky argued in Revolution Betrayed, that the political revolution that overthrew the bureaucracy would restore a healthy workers’ state. But he could not exclude the possibility that the capitalist counter-revolution would bring about the restoration of capitalism in Russia. State property could be easily adapted to the operation of the LOV in the epoch of state monopoly capitalism. The personnel of the bureaucratic state would overnight convert to the role of capitalists in the new state to serve the interests of collective capital. The main object would be to restore the private ownership of property. New state policies to manage the productive, distributional and monetary tasks would serve to regulate the market as a whole to produce capital goods, infrastructure, and the accumulation of capital. Concretely, the state would enter into the productive circuit to facilitate the formation of constant capital (plant and machinery etc) and variable capital (wages and the social wage).
Marx had anticipated growing state intervention on behalf of capital in its administration of the public debt which emerged in the 19th C to further the concentration and centralization of capital by taxing wages and accumulating savings. For Lenin the role of the state was central, in fact defining, to the age of state monopoly capital. State intervention in the market competition for existing value was proof that the laws of motion of capitalism could not be avoided. First value had to be produced by labour to be exchanged and accumulated by finance capital. The LTRPF would cause recurring crises of overproduction and the imperialist powers which resort to the counter-tendency of paying labour less than its value.
The extraction of super-profits and absolute rent would inevitably create deeper crises and wars between rival national blocs of capital. As a result the LTRPF downloaded deepening crises onto the backs of workers so that the class struggle would erupt into revolutions and counter-revolutions. In summary, the short 20th century from 1917 to 1992 was ultimately all about imperialism destroying the Bolshevik revolution and restoring its hegemony over the capitalist world to re-divide the spoils among the victors.
While the LOV always dominated the history of capitalism, in both corporations and states, it does not do so under the same conditions. The revolution at the beginning of the short 20thC was an historic defeat of global capitalism. Yet the counter-revolutionary end to the Cold War in 1992 which restored capitalism to Russia and China did not completely destroy the legacy of the revolution. Those who celebrated that counter-revolution as the end of ‘socialism’ and a victory for capitalism did not anticipate the contradictory blowback of the legacy of the former bureaucratic workers’ states. Notably the relatively high level of development of the forces of production, and the centralized command economy, that helped restore capitalism and create new imperialist rivals in the ‘great game’ for Eurasia and the World.
The counter-revolution in the revolution enabled the new capitalist states to benefit from the decay and decline of global capitalism. China was able to restore capitalism’ without submitting to ‘recolonisation’ and imperialist domination. This explains its ability to convert a transitional petty bourgeois national revolution into a state monopoly capitalist counter-revolution with the capacity to regulate and manage the LOV within the limits of rising organic composition and the LTRPF. But these benefits will be illusory for the great mass of workers and peasants. China’s rapid rise is creating a reactionary response in the West which is already on the brink of world war over the repartition of Eurasia with escalating wars already on three fronts between the two imperialist blocs around the US and China.
So the legacy proved progressive only in the sense that it allowed China to escape re-colonisation and quickly adapt a dynamic state monopoly capitalism to develop the forces of production over a two decades leap in growth. As part of that legacy it carried with it the inescapable terminal crisis of overproduction in a dying and decaying global capitalist world. The question is this, how long can China’s state capitalist management of the LOV create growth in the productive forces within the BRICS bloc and further the pre-conditions for socialism, before the inevitable determination of the laws of motion of capitalism explode the contradictions of class war, crises and inter-imperialist wars on the lives of workers and poor farmers? The answer is surely that only the world’s working classes can resolve this question by rising to the struggle to take power and plan a new society without exploitation, ecological destruction and nuclear war.
Roberts on China transitioning to socialism https://www.redreview.ca/p/prc-75-today-the-transition-to-socialism
Roberts on China as a transitional economy to socialism https://www.jstor.org/stable/pdf/48713461.pdf
Carchedi and Roberts (2023) Capitalism in the Twenty-First Century – Through the Prism of Value. Pluto
John Smith ttps://www.researchgate.net/publication/281225444_Imperialism_in_the_Twenty-First_Century
ILTT Draft theses on imperialism https://www.cwgusa.org/?p=3021
