Introductory Note: This document represents the position of a minority within the IFLT, consisting of HWRS and the Communist Workers Group of New Zealand (CWG). The July 2009 FLTI Congress agreed to continue the debate on China publically, before the global workers’ movement, pending further discussion at a future congress. We are publishing this document as a contribution to that discussion. It was generated as an internal document, and has not been edited for grammar and style. It was drafted by HWRS; the CWG agrees with its general line.
Update (February 2010): Click here for an overall introduction to the China debate, and links to other related documents.
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The Implications of China’s Contradictory Nature:
Being Imperialist with a Super-Exploited Proletariat
The latest document of the minority of China concentrated on proving and developing the theory that explains why China is an imperialist country. It is not that the minority denies that in China’s is super-exploited. This aspect of China, at the moment, is as important as its emerging imperialist character for grasping the world situation.
It is the combination of both China as an imperialist country and China as a center for super-exploitation (primarily for the Chinese bourgeoisie) is what makes the current crisis so acute and potentially explosive.
To understand the development in China and the role it plays today we must understand the transformation that started to shape up in the imperialist countries and the semi-colonies since the 1980s. In the 1980s the US started to move many of its major industries to the semi-colonies and the colonies. These shifts happened because the US’s industries started to lose some competiveness due to the intensifying imperialist rivalry that started in the mid 1970s after the so-called boom of the 1960s was busted. This was true in particularly in the auto and steel industries that were moved into different semi-colonies. Many mid-west towns and cities in the US have become ghost towns. You can all see it in the movie "Roger and Me". To a large degree these moves were forced on the US industry because of the lower rate of profit.
Capitalism had to deal with the innovation of high tech machines run increasingly by computers in the factories. Thus constant capital grew in comparison to variable capital, and the rate of profit has become lower. This forced the capitalists to lay off workers as the capitalists brought into the factories more machinery which was also more expensive. They (the capitalists) thought that they can resolve the lower rate of profit problem by dramatically lowering the workers’ wages, that is, the capitalists increased the surplus value in relation to the higher constant capital by moving industries to the semi-colonies. But the move of US industries to the third world was matched later by similar moves from Europe and Japan. So while the American capitalists were able to increase profit by moving factories to the semi-colonies, the advantage vanished after the competitors did the same.
In general the move of industries to the third world increased the competition between countries and industries that remained fierce. Why? Because the rate of profit kept on falling as technology replaced workers. One particular change started to happen at an increasing rate: that is, the ratio of the proletariat in many semi-colonies in comparison to the peasants started to rise fast. This process increased dramatically in the early 1990's after the collapse of the workers’ states, as China (to some degree) and the new semi-colonies in Eastern Europe and to a lesser degree Russia have become a hub for imperialist capital that built new factories with the lowest possible cost of labor. The NAFTAs the GATTs and other imperialist mechanism were put in place to maximize exploitation as the flow of commodities from the third word to the imperialist centers was rising, and as new industries and factories were built very quickly in many semi-colonies. We already wrote a strong theoretical article about it in 1995, in which we described the contradictions and the mechanism of the process. We predicted that this would lead to the biggest world capitalist crisis since the 1930s. While our general analysis was right, we were wrong about the speed and timing of the crisis (we thought that it would happen sooner than today). As the ratio between the proletariat and the peasantry kept on increasing in favor of the proletariat in the semi-colonies, many peasants’ life was ruined and they were forced to move to the cities and get a job or became part of the huge unemployed.
We do not say that this happened in every oppressed country. There are still countries (Afghanistan, for example), that the workers remain small percentages of the population. But many countries still undergone the above dramatic changes, and they became very proletarianized. That does not mean that these countries have become advanced capitalist countries or imperialist countries. Not at all. On the contrary, it only means that these countries have now larger proletariat, but the working class and the native bourgeoisie are still subordinate to imperialism, which still enslaves these countries. Many workers in the new factories have the lowest unlivable wages and worse conditions than ever.
The Left has not dealt seriously with the meaning of the growing movement of the means of production to the semi-colonies as the oppression of the semi-colonies by imperialism intensified and the workers’ salaries remain a small fraction of the workers’ salaries in the imperialist countries. It does not take an Einstein to see the effects of this in the imperialist centers. If GM pays the workers in Brazil a small fraction of what GM pays the workers in the US why does GM want to keep its factories in the US? If GM competitors move their factories to the semi-colonies, GM is in an inferior position against its competitors unless it moves more of its factories to the semi-colonies. So the process of moving the means of production to the semi-colonies continued to rise as each company was competing with advisories that took advantages of the super-exploitation in the semi-colonies.
Trotsky was observing that to some extent, and he predicted the possibility that the number of the proletarians in the semi-colonies would rise over time:
“Under present conditions in bourgeois countries, even in the backward ones, insofar as they have already entered the epoch of capitalist industry and are bound into a unit by railroads and telegraphs – this applies not only to Russia but to China and India as well – the peasantry is even less capable of a leading or even only an independent political role than in the epoch of the old bourgeois revolutions. The fact that I invariably and persistently stressed this idea, which forms one of the most important features of the theory of the permanent revolution. . .” (Trotsky, The Permanent Revolution, p. 194)
This explains why some semi-colonies have become more “advanced” than others. And when a semi-colony country consists of a proletarian majority, imperialism can get an advantage from dominating such a semi-colony mostly by extracting super-profit from the super-exploitation of the workers. For now imperialism can only dream about a similar degree of super-exploitation of the proletariat in the imperialist centers.
The restoration of capitalism in China and E. Europe intensified the process of the movement of the means of productions to the semi-colonies. Here we are talking about a process in which super-exploited proletariat became a key factor in the imperialist’s inter-rivalry. To prevail against strong inter-imperialist rivalry and grow as a new imperialist power China had to rest on such super-exploited proletariat. The fact that the new capitalists prevented the SOEs from falling into western imperialism hands did not change the facts that the SOEs themselves were and still are part of the huge Chinese super-exploited labor. The workers in the SOEs suffer the same conditions, similar to the workers in the rest of China, that is, their salary and exploitation are similar to the rest of the proletariat in China, or only slightly better. This is a key in understanding the evolution of China and the world situation. Without the super-exploitation of the workers in the SOEs, the new Chinese capitalists (the old Stalinist bureaucracy) and the state, through the mechanism of state capitalism, could not have accumulated such a huge surplus capital that would allow China to become an imperialist country. The advantage of China over its rivals is that China was able to develop its imperialist character from its ability to use the Chinese proletariat as a super-exploited proletariat. This gives the Chinese imperialists an advantage over the Western imperialists.
After capitalist restoration, China retained its own former republics and autonomous territories etc as internal colonies. Western imperialism has not been able to strip China of these territories. Thus restoration left the new bourgeoisie with a strong centralized state, state-owned banks and industries, and huge areas of economic control (its internal territories were convert into an imperialist sphere of interests). What was missing in the former DWS was advanced capitalist technology. To get this the new bourgeoisie in China did what the semi-colonial bourgeoisie cannot do: set strict limits to FDI. The conditions for acquiring high tech were set through economic cooperation, export production and technology transfer. The Bolivarian left sees this as a sort of massive 21st century NEP. The result is that in exchange for surplus value extracted by FDI from the huge Chinese working class the Red Chinese capitalists got access to ‘Western Technology’ and could rapidly develop the forces of production and accumulate capital at the expense of the other imperialist powers.
So China must be independent from Western imperialism. Such independence was possible because the DWS allowed the new capitalist class to develop a strong structure of state capitalism in which the industry from the DWS was the key for the transformation of China into an imperialist country in its own rights. Of course, that means that China’s territories must remain to a large degree in Chinese hands and under the thumb of the emerging imperialist power. In this sense China is still independent both politically and economically from the rest of the imperialists (although that does not mean that Western imperialist do not have investment in China to protect).
Yet this process could have taken place only by transforming the Chinese workers into a super-exploited proletariat which gave the emerging imperialist country critical advantages. The question is can China change the status of its own proletariat after its successful emergence as an imperialist country? Can China become an advance capitalist country after its ruling class got its hands on new technology? The answer is negative at least for now, because China faces fierce competition from other imperialist powers that have moved a bulk of the means of productions to different semi-colonies and China (although China is politically and economically still in control and in this sense ‘independent’). While in the 1980s and early 1990s the US kept the high tech industries inside the US, this has changed. Now Western imperialism is not hesitating to build high tech machines and high tech based factories in the semi-colonies. It is the logic of capitalism. They do that to prevail and avoid defeat by the competitors by reducing the cost of labor (variable capital). But as constant capital rises and rate of profit keeps on falling the inter-imperialist rivalry is intensifying. From this understanding we can see that even though Chinese imperialism is getting high tech, it must retain a super-exploited working class to beat the competition in the current crisis.
It is this fierce competition based on industries in the semi-colonies that does not allow China to become an advanced capitalist country and it needs to keep its proletariat super-exploited. This is a new “animal”: an imperialist country that rests on a super-exploited masses, whose super-exploitation is if anything worse than the average super-exploitation in the semi-colonies.
As long as China can extract super-surplus value from its own proletariat it drives the rest of the imperialists’ gangs to either move more industries to the semi-colonies or drive the workers in their own centers as close as possible to super-exploitation. Beside the usual explanations for the classic big bust of the system, the above is critical for understanding the depth of the crisis and why the workers (in particular in the imperialist centers) must fight to the bitter end to avoid big historical defeats.
As we explained, and this is the crux of the matter, China was able to rise to a position in which it remains independent from Western imperialism and became an imperialist by its own rights because the new capitalist class was able to accumulate a huge surplus capital from the super-exploitation in the SOEs that were the foundation of the Deformed Workers’ State (DWS). This gave China an advantage over its rivals, who extract surplus value from a mix bag of super-exploitation in their colonies and semi-colonies as well as from “regular” exploitation in the imperialist centers. In order for China to maintain this advantage it must keep its entire proletariat super-exploited. With the current crisis of overproduction and lower average salaries for the world working class, China remain in fierce competition with its imperialist rivals. This competition is not just about raw material (oil, copper, etc.) but also for the extraction of surplus value from the proletariat in the semi-colonies and China itself.
It is true that in China there is a rising labor aristocracy and layers of petty bourgeoisie (some 100-150 million). These consist of aristocratic layers of factories management, service management, millions of entrepreneurs, lawyers, academics, engineers the layer identified as the professional and managerial They serve the huge Chinese and foreign corporations and the capitalist class that arose in China. These privileged layers reflect the rise of Chinese imperialism. Yet the majority of workers and peasants remain super-exploited and oppressed.
Despite advances that came because China was a DWS, it is incorrect to say that the democratic tasks or even the national tasks are resolved in China. China did not go through the “stage” of bourgeois democracy, nor did it go through the stage of Soviets or workers’ democracy. Since the 1949 revolution it was bureaucratized from the beginning and the workers and peasants were oppressed from the inception of the DWS. The conditions of the peasantry went backward since the restoration of capitalism. And their oppression is more akin to the peasants’ oppression in Bolivia and Peru, than the state of the farmers in an advanced capitalist country. And those peasants that have become workers are super-exploited. Thus all the democratic tasks of an oppressed nation were not resolved in China, and they are unlikely to be resolved until the proletariat will lead the peasantry in the struggle to power that can be resolved through the establishment of the dictatorship of the proletariat with a genuine workers democracy. So all this understanding of permanent revolution in regard to China did not change.
The national questions have not been resolved either. Besides the majority Han Chinese, there are at least 55 other nationalities or ethnic groups, many are oppressed. Recent clashes in Urumqi are a clear testament of this. Thus like in Russia pre-1917, the national question is not really resolved in China, and cannot be resolved without the socialist revolution.
The Peoples Republic, either as a deformed workers state or as an independent capitalist country post-restoration, has not finished the bourgeois revolution in the sense of completing its national-democratic tasks. Within "Chinese" borders you have a "Prisonhouse of Nations" lorded over by the Han leadership of the CCP and their Han national chauvinism. Completely apart from consideration of the active divide-and-conquer schemes of U.S. and Japanese Imperialisms to exploit several ethnic divisions, these divisions have a real, pre-existing form in the national oppression of the Mongols, Turkmen and Uighurs, the Tibetans and others. The bureaucratic form of the imposition of workers state power by military means in 1949 did nothing to ameliorate this. The needs of the planned economy did tend to come into objective conflict with the different national oppressions as great armies of labor were needed for the various production campaigns, when masses were moved from region to region, often for years. Still, as under Russian Stalinism, workers from these regions always had to carry police passports and visas to seek work in Han provinces. Hence they are "foreigners," in all but the formal, juridical sense (which we may assume has as much propaganda content now as ever,) and nowadays these workers are the last to be hired and first to be fired. These, then are your migrant tens of millions who now have to return to little plots of land in their home "regions" (countries) to scratch out such living as they can after being laid off in the big industrial cities of the Han provinces.
These are the truly most super-exploited peoples of the Chinese internal empire. The workers from these countries will never be permitted to earn the take home pay or the lifestyle of their merely exploited worker sisters and brothers in Japan or the empires of the West. They are a big part of the Chinese bourgeoisie’s "secret" for amassing capital surplus while world markets contract. And in fact the super-exploitation of these workers is a key and necessary ingredient for China's growing overseas FDI. They are ‘colonials’ to the bourgeoisie of their own nation state.
The fact that Chinese imperialist is emerging from the super-exploitation of the proletariat in China gives it a strong advantage particularly since the Chinese bourgeoisie is the strongest super-exploiting bourgeoisie in China. China’s integration into the world economy as a huge area consisted of hundreds of millions super-exploited workers, contributed to the massive amount of overproduction. This contributes significantly to the inter-imperialist rivalry and it is re-enforcing the trend of movement of the means of production to the semi-colonies. After all China is emerging as one of the biggest huge industrial centers in the world where a huge amount of the means of productions are concentrated. To remain a strong imperialist competitor its must keep the Chinese proletariat as one of the most super-exploited proletariat. And the other imperialist countries must move more factories to the semi-colonies to compete with China and other Western imperialist rivals.
All the above developments (that start in the 1980s) put enormous pressure on the imperialist centers. To survive the imperialist countries must choose between two fundamental routes. An imperialist country can move most of the means of production to the semi-colonies and transform its own proletariat into a “service” proletariat that serves the means of productions in the semi-colonies. This is a dangerous route since it produces mass unemployment of over 20%. But the pressure is not only to export the means of production by also to export the service to the means of production to the semi-colonies. For example, all the airlines in the US laid off many of their service staff. Today if you make a reservation for an airline ticket you will likely talk to someone in India. Silicon Valley moved many of their software engineers to India and there is a big unemployment among software engineers in Silicon valley. So the pressure in the imperialist centers is not only on the industrial proletariat but also on the service proletariat.
The more realistic approach for an imperialist country is to try to bring an historic defeat on its own working class and reduced its standard of living to that of the proletariat in semi-colony. This is clearly the approach of US imperialism, and it achieved it with some undeniable success. The standard of living of the American working class was reduced by about 50% since 1980 when American capitalists started to move factories to the semi-colonies. This is one of the main secrets that explain why US imperialism kept its dominance.
We cannot explain the savage attacks of US imperialism on the working class in this country in the last three years unless we understand the emergence of China as a strong imperialist competitor that is based on the super-exploitation of its own proletariat. This put immense pressure on the US. If it wants to keep its competitive edge and retain some industry in the US, it must reduce the US working class into rubble—to the same level of ruin and misery of the Mexican and the Chinese proletariat. This is the process that we are witnessing now. We cannot fully explain it unless we understand China as a rising imperialist country that is resting on the biggest super-exploited proletariat in the world. So to understand the world situation we cannot only see China as a rising imperialist country that is competing to plunder the world for its own industries, but we need to understand that its own industries consist of the most oppressed and super-exploited proletariat, and that put an enormous pressure on China rivals. They must bring their own proletariat as close as possible to the conditions of the Chinese proletariat. This will be a cause for enormous revolutions or counterrevolutions in the imperialists’ centers in the coming periods. How long can France tolerate giving concessions to the militant and brave workers? France is losing its competiveness and it is on the road of becoming a minor imperialist power. To prevent this it must smash all resistance in its semi-colonies but in France itself as well. As time progresses and the working class in France prevails, “democracy” in France will become obsolete. The ruling class will have to use fascism to defeat the workers. Thus the prospects of socialism or fascism are on the agenda not only in the semi-colonies (that many revolutionaries take for granted) but in the imperialist centers as well including the US.
In China itself the extraordinary oppression and exploitation produce massive amount of class struggle with tens of thousands of strikes and workers demonstrations. The minority and the majority of the ILFT have the same program for the victory of the Chinese proletariat which include the struggle for power and the overthrow of all the imperialists and capitalists in China. China is ripe for building a massive revolutionary party, and together with the socialist revolution in the US, the Chinese revolution is key for the victory of the international revolution. While the severe oppression by the “Stalinist” bourgeoisie make it very difficult to build a Trotskyist party in China, we should and must find a way to do it. Without such a party a huge section of the world proletariat will not be able to take power. Every week the brave struggles of the Chinese workers signals the readiness of the workers to fight back and smash capitalism and imperialism. Accordingly we must intensify our efforts to find a way to build a revolutionary party in China.
Dave Winter and Dan for HWRS
The CWG supports the general line of this document.