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Capitalism, Socialism, And The Essay, Research Paper

The 1949 Chinese Revolution was a transformative, epochal event, not only for the Chinese but for the rest of humanity, as well. If the 1917 Bolshevik Revolution in Russia (that resulted in the creation of the Union of Soviet Socialist Republics or Soviet Union) inaugurated an international competition for the hearts and minds of people all over the globe, the Chinese revolution raised the stakes of that struggle. This struggle was understood in the so-called West as between “capitalism” and “communism,” although these terms were rarely defined in more than loose and unusually flexible terms. Communist ideology, as represented by certain statements of Vladimir Lenin, the central intellectual and political figure of the Bolshevik Revolution, was understood as grounded upon an idea of worldwide revolution — all nations would, according to the logic of the theory, ultimately succumb to communism. (The Soviet leadership expressly supported the idea of “worldwide revolution” and took steps to help achieve this objective, including organization and leadership of the so-called Communist International or Comintern.) This idea of worldwide revolution and the efforts by Soviet leaders and communists in other countries to make it a reality presented little room for compromise between the opposing camps (on the one side, the supporters of the existing social system in the Western nations and, on the other side, the communist movement). Thus, the communist victory in China (the most populous nation on Earth) created a stronger sense of threat in one camp and of impending victory in the other.

If societies are really formations of social and environmental processes, all interacting and shaping one another, then the introduction of this polar conflict between these two camps into the fiber of existing social relationships could not help but impact virtually every society (or social formation) and transform numerous cultural, economic, and political processes within those societies. New problems were created for those who wanted to defend the status quo (the moral, political, and economic arrangements that predominated) in the so-called Western nations, as individuals took up the rhetoric of the Soviet or Chinese versions of Marxism. The existence of the new “Chinese model” was particularly troubling because it opened the door to a “domino effect” of revolutionary change in the less industrialized world, creating the possibility of accelerated social change that might threaten the established order in the advanced capitalist nations.

Sometimes the effects of this conflict were quite unexpected. For instance, many individuals have argued that the “Cold War” (particularly the post-1949 Chinese Revolution version of the Cold War) may have been critical to the success of the so-called Civil Rights Movement in the United States, as U.S. political leaders sought to win the hearts and minds of leaders in newly independent African nations and intellectuals throughout the so-called Third World by demonstrating the openness, flexibility, and fairness of the American way of life (including the American economic system, which was presumed to be the embodiment of capitalism and diametrically opposed to the “communist” alternative). Ironically, the Civil Rights Movement was also interpreted, within certain anti-communist circles, as a subsidiary operation of the international communist movement. Civil Rights leaders, such as Martin Luther King, were often accused of being communists. Thus, the new language and logic of communism and anti-communism (mostly in rhetorical form) transformed the rules of social engagement over racism, as well as many other issues.

In a larger sense, the conflict between these two camps reshaped popular culture. New images and ways of thinking about the self and society permeated the media, from literature to the motion pictures. For the most part, the conflict was not waged in terms of social theories or ideas about the proper organization of society. Instead, the conflict took on a religious connotation. In the West, communism was portrayed as “sinister,” even “evil.” Behavioral norms were changed, influenced by images of impending threat from the communist menace, whether from without or within. Anti-communism coalesced into a form of paranoia. This paranoia was promoted in a wide range of films and books. One of the classics of this era was the science fiction film, Invasion of the Body Snatchers. In this and other films, the concept of threat from infiltration of family and friends was supportive of notions prevalent within the anti-communist movement that communism would capture the hearts and minds of the innocent and turn them into obedient slaves of the world communist movement.

But this cultural battle begs the question — was the struggle really between capitalism and communism? Does this notion capture the essence of the conflict in question? Or were these words simply misused tools in a conflict over more mundane issues, such as whether a relatively old and established elite would control the resources and political machinery in certain countries or whether a new elite would come to power and take their place. It would distort matters to imply that this struggle between different political and economic agencies, at a minimum it was a struggle between the governments and corporations of the West versus the government and bureaucracy of the newly formed USSR, could be reducible to either a conflict between capitalism and communism or a contest for control by two different sets of elites. Similarly, it would be a distortion to imply that it is not possible for the conflict to simultaneously satisfy both the capitalism versus communism condition and the contest between elites. However, it is no less distorting to begin with the assumption that either of these conditions is correct. We need to know that the Bolsheviks were genuinely interested in communism if we are to assume that the initial conflict — the USSR versus the West — was ever between capitalism and communism, as alternative, oppositional, and mutually negating social systems. This is not proven by the simple statements of the Bolsheviks about their interest in creating communism at some unspecified date in the future. We must have a clear sense of what communism is and whether or not the Bolsheviks were working to establish the conditions for the existence of such a social formation. After all, if a new slave master were to take control of a slave plantation and tell his slaves, “My ultimate goal is to free you and to create a new form of social arrangement in which you shall never be oppressed again,” would the slaves believe him? What would be necessary for them to believe him? If a conflict breaks out between this new slave master and the slave masters at other plantations then perhaps this might reinforce the idea that something extraordinarily different (and threatening to the old social order) was happening. But would that conflict be sufficient to convince us, as social analysts, that this conflict was between slavery and an alternative social system in the making (and not simply between two variant forms of slavery)? In other words, what would we need to know in order to conclude that this new slave master was a “revolutionary” intent upon ending slavery? To imply that the conflict between the West and the USSR (and the later expanded conflict between the West and the Communist Bloc) was a struggle between capitalism and communism is to imply that the so-called Communist Bloc was genuinely interested in creating communism.

In the West, there is a tendency to speak of the USSR, China, and other members of the “Communist Bloc” as already communist nations. Communism is defined in polemical fashion as synonymous with the set of political, economic, and cultural processes that developed in the USSR under the dictatorship of Joseph Stalin. This definition ignores prior discussions of communism in philosophy and social science, including Marx’s few references to this system. Similarly, capitalism gets defined in simple terms as the commonly recognized features of the economic and political system(s) prevalent in the so-called Western nations, particularly the presence of relatively unregulated corporations operating in relatively “free” markets and popular voting for certain governmental positions. In the most simplistic version of this polemic, capitalism is simply conflated with “free” markets. Indeed, there is no need for the word “capitalism” since the phrase “free markets” would capture the entire meaning of the word. Marx’s multi-volume attempt at producing new knowledge about the specificity of capitalist economic processes (where the word capitalism is produced as a social concept defining an historically evolving and unique set of social relationships by which certain individuals perform surplus labor and a different set of individuals appropriate this surplus labor is ignored (although Marx’s name may be invoked for polemical purposes)). Thus, it may be useless, in the context of this polemical “debate” over capitalism and communism, to try to distinguish whether or not the conflict between the West and the “Communist Bloc” was a conflict between actual capitalism and actual communism, understood as strictly defined and alternative economic systems. In the polemical debates, the terms capitalism and communism lose all social scientific meaning. The entire history of thought within which capitalism was defined as a unique economic system formed around a distinct class process and communism was defined as an alternative mode of producing and appropriating an economic surplus is absent from the arena of these debates. Instead, in the popular rhetoric, capitalism and communism become simple proxies for two specific sets of contending social formations (distinct in many ways but not necessarily in terms of prevalent class processes).

But we cannot play so fast and loose with these concepts if we are to make sense of the internal struggles and debates within the Chinese leadership that came to power in 1949 (anymore than it would make sense to ignore the historical definitions of capitalism and communism if one wanted to make sense of the post revolutionary struggles and debates within the Bolshevik leadership). In our survey of the Chinese economy, we will attempt to gain a better understanding of what was at stake in the Chinese Revolution of 1949, of the contending visions within the leadership of the Communist Party of China as to what constituted capitalism and communism, and whether or not there is any “objective” way to determine if China underwent a revolution as sweeping as the term communism implies. This will be important as we explore the current phase of “economic reform” in China and attempt to make sense of where China is going in the future.

But first, let me be clear about something on this point. China’s leadership never claimed to have inaugurated communism with the 1949 Revolution. As was the case with the Bolsheviks, China’s leaders were members of a communist party but never claimed to have instituted communism — a society without exploitation — with their revolution. They claimed merely to have overthrown the political leadership of the “bourgeois” state — to have made a political revolution against a pro capitalist state — and by so doing to have cleared the way for the construction of “socialism.” Socialism was understood as an intermediate stage between capitalism and communism. During this intermediate phase, the preconditions for communism would be gradually put into place to allow for the eventual attainment of communism, which some of the opponents of communism have described as a form of utopian (and therefore unattainable) society. No one ever said how long the society would have to be in this intermediate “socialist” stage, nor was the stage itself or the preconditions for communism that were to be instituted clearly defined. It was also anticipated that worldwide revolution would result in rapid growth of communist party led governments around the world and that these governments would develop socialism in a coordinated effort. Socialist solidarity was understood as an inevitable consequence of the movement of social forces that could be delayed but not permanently forestalled. Thus, the Soviet leaders saw the Chinese revolution as just another step along this road to the coordinated building of socialism. Socialism was never conceived, within communist ideology, as a system that would be developed sui generis in individual countries. There would not be a Soviet form of socialism and a Chinese form, for instance. This way of thinking not only caused tensions between Soviet intellectuals and political leaders and their Chinese counterparts but also caused some rather serious squabbling among Communist Party of China (CPC) leaders, with some taking the internationalist line and others arguing in favor of the idea of a unique Chinese form of socialism.

To further complicate matters, the Chinese Nationalist Party or Guomindang — the party that was overthrown by the Chinese Communist Party and subsequently fled to the island of Taiwan — did not view itself as an instrument of a ruling capitalist class (which would be consistent with the notion of a “bourgeois” party). To the contrary, the Guomindang, many of whose leaders were openly supportive of and supported by the Soviet Union (and some, such as Chiang Kai-shek, studied in the Soviet Union), was generally described as nationalist and socialist. Sun Yat-sen, the Guomindang’s Lenin, was one of the strongest supporters of the Soviet Union. And the Soviets provided the Guomindang with financial support, armaments, and advisers. (If this is not sufficient to make the ideological waters murky, then consider also that the Chinese Communist Party made nationalism an important aspect of its constitution, eliminating another potential ideological difference.) On numerous occasions the Guomindang and the Chinese Communist Party were allied, particularly in the anti-imperialist struggle against the Japanese and there were even members of the Guomindang who simultaneously held membership in the Chinese Communist Party (at least until Chiang Kai-shek began his purge of communists from the Guomindang). The Communist Party officially recognized the valuable role of the Guomindang in bringing about the transition from the monarchist regime, embodied most recently in the form of the Qing Dynasty, to a modern state. This, of course, begs the question of who would control that state as the Chinese nation continued along a path that both the Guomindang and the Communist Party called modernization. When the Guomindang, under Chiang Kai-shek’s leadership (after Sun Yat-sen’s death), turned against the Chinese Communist Party in 1927, assassinating most of the communist leadership (leaving a void that would be filled by the rural based Mao Zedong), the motivation may have been less ideological than part of an effort to eliminate any possible competition over control of this so-called modern state. Thus, the Chinese Communist Party, who won the struggle against the Guomindang despite the aforementioned assassinations, overthrew one version of socialism in favor of another version, at least when viewed in purely polemical terms.

This leaves us with some perplexing questions. What exactly was/is socialism? What did the Chinese Communist Party leadership mean by this term? What do they mean when they use it today? Is there a narrow enough definition of the term “socialism” as to allow us to test whether one society is or is not socialist?

For that matter, in order to make sense of the aforementioned struggle between communists (who are portrayed and portray themselves as opponents of capitalism) and anti-communists, we will need to ask similar questions of the concepts of capitalism and communism? Because these terms are frequently used for polemical purposes, we often think we know what they mean and can very easily end up like the Caterpillar in Alice in Wonderland (with these words meaning whatever we want them to mean). For our purposes, however, we will need to both understand what political and intellectual leaders in China (and elsewhere) meant by these terms and to attempt to find social scientific definitions (very strictly defined and testable terms used in a consistent manner within a consistently logical framework of argumentation) that could be used to analyze the economic, political and cultural dynamics driving change in Chinese society. These are two very different ways of talking about the concepts of capitalism, socialism, and communism.

Let’s begin with the latter problem—finding a social scientific meaning of these terms. We need a social scientific definition of capitalism, socialism, and communism that can be deployed in our analysis of the Chinese economy, Chinese economic history, and the intellectual debates about China’s so-called communist revolution and its current transition (from what to what?).

Since the concept of communism was/is largely understood as oppositional to capitalism, then lets start with capitalism. What is this thing that the communist party leaderships (in China, the Soviet Union, and elsewhere) wanted to transcend and ultimately replace with communism? The term capitalism began its life as an economic concept, although today it is often used to describe political and cultural elements, as well. Nevertheless, a concept of capitalism that is overly general or synonymous with other widely used concepts — such as the conflation of market economies with capitalism — becomes less useful as a device for categorizing and analyzing. What we want is a concept of capitalism (and communism) that is narrow and unique enough as to allow us to distinguish something profoundly different or similar between the societies under analysis (and, in a more micro context, between different social relationships within the economy).

Since Marx is often implicated in the various debates over this and related issues, it might help to get an idea of how Marx understood capitalism. Marx, in his attempt to distinguish the different social processes that shape people’s lives, discussed a wide range of social relationships and processes: property, exchange, and power relationships played an important role in his analysis, for instance. However, Marx thought that many social commentators had, over time, done a great deal to analyze, even criticize, existing forms of property ownership, exchange relationships, and political arrangements. Social analysts who opposed the existing social order, capitalism, because they felt it was oppressive generally criticized these particular aspects of the capitalist societies of the day. Marx believed that even if these factors were changed — property ownership, exchange relationships, and political arrangements — it was not guaranteed that one would get to the heart of the problems created by capitalism. In particular, he believed that there existed a form of oppression that was poorly understood, rarely discussed, whose genesis had required dramatic changes in the living conditions and social status of countless human beings, and which was critical to understanding what it was that made capitalist society unique vis-a-vis other unjust societies (Marx was clearly making some important value judgments in his criticisms of capitalism, feudalism and slavery). This unique form of oppression is what he called capitalist exploitation.

But capitalist exploitation, to be understood, had to be strictly defined as distinct from other forms of exploitation. And exploitation, as an economic concept, had to be strictly defined as distinct from other forms of oppression. Marx defined exploitation as the product of a generalized social process, called class. Since capitalism is the prevalence of a specific type of class process, i.e. the capitalist class process, then we should begin by understanding this generalized concept of class before moving to the more specific instances. In other words, we want to be able to answer the question of what is a class process before answering the more specific question of what is the capitalist class process. Once we can answer both of these questions, then we will be in a stronger position to test whether or not the facts of the Chinese revolution and post revolutionary society have, indeed, been anti-capitalist (as might be anticipated by the rhetoric employed by many of those engaged in the communist/anti-communist debates of the Cold War era).

In order to understand class, we will use the conceptual language that has been developed by Stephen A. Resnick and Richard D. Wolff, two noted economists from the University of Massachusetts and the founders of the journal Rethinking Marxism. Resnick and Wolff’s reading of Marx leads them to avoid using the word class as a noun, as is common practice. For Resnick and Wolff, the issue that Marx focused upon in his major theoretical works (Capital, Theories of Surplus Value, and Grundrisse) was not a struggle between classes but a struggle over class as a social process (the term process implies a continually changing phenomenon — a phenomenon that exists in motion). For this and other reasons they use the term class process in describing the unique type of social interaction that Marx was concerned about in his social scientific work.

What is class process? Firstly, Marx understood that society depended, among other processes, upon human beings physically transforming raw materials and other material inputs (machinery and other products of past labor) into new and useful products. Food has to be grown and prepared. Cloth has to be created and clothing made. Construction materials and housing have to be made. And so on. For Marx this productive effort was general to all societies, irrespective of the existence and/or type of class process. All human beings do not, however, engage in activities resulting in such useful products. And even for those who are so engaged, they may, under certain conditions, consume such products in excess of the value of what they produce. Thus, under certain social conditions it is necessary for some workers to produce output in excess of the output they take as compensation for their efforts. This extra work has been defined by Marx and others as surplus labor. The extra product created by surplus labor was defined as surplus product. And the social value of the surplus product (as typically determined in market exchange relationships) was defined as surplus value. Now we have all of the ingredients necessary to a relatively strict definition of class process. Class process is the social process that results in i) human beings performing surplus labor, ii) the surplus products (of this labor) being appropriated and iii) the distribution of the surplus value (in surplus product form or in monetary form) to other human beings.

What distinguishes one class process from another? In other words, how can we distinguish capitalism from feudalism or feudalism from communism? All these are class processes in so far as they involve the production, appropriation and distribution of surplus products. The difference between the various class processes is the particular social arrangement that results in the worker performing the surplus labor and the appropriator taking possession of the fruits (the product or value) of that surplus labor. And these social arrangements have been variable over time and place. Marx spent a great many pages attempting to specify the historical process that brought into being the social arrangement that is peculiar to capitalism. It was the primary purpose behind the writing of the three volumes of Capital, his best known social scientific work (although less well known than his shorter more polemical Communist Manifesto). In a nutshell, the social arrangement that distinguishes the capitalist class process from other class processes is the existence of a free market in labor power (the capacity to work) under conditions where it is possible for someone other than the actual laborers/direct producers to take possession of the fruits of their labor. This definition tells us that capitalism, if it is to exist and be reproduced over time, requires a particular type of market, a free market in the buying and selling of labor power, and a particular type of ownership, the ownership of the fruits of the labor of an employed wage laborer by someone other than that employed wage laborer.

However, capitalism is not reducible to either markets or ownership. There must be a free market in labor power, meaning that potential laborers must have the freedom to seek employment (for a wage) in an environment where, under normal conditions, there are choices about possible employers. There must be a political and cultural environment within which it is possible for someone other than the worker who created a product to take ownership of that product. The worker is paid a wage, embodying a certain amount of economic value, in exchange for her giving up the right to own the fruits of her labor. She accepts this contract willingly and retains the right (the freedom) to quit her employment and seek employment elsewhere. That’s it. That is capitalism. This simple but powerful definition provides all that is necessary to determine if the capitalist class process exists under concrete social conditions. We do not need to know who rules the state or whether voting plays a role in determining the composition of an existing legislative body. We do not need to know if there are flexible exchange rates. We do not need to know if there are gun laws. We do not need to know whether people in the country speak Putonghua or English. Of course all of these topics might be useful in any attempt to tell the story of how capitalism came to exist or not or the particular context within which it exists.

If the capitalist class process is the appropriation of the surplus value of free wage laborers (laborers who seek employment for a wage in a free market in labor power) by human beings other than the free laborers themselves, then we can easily see where some of the confusion has originated. Instead of seeing free markets in labor power as a condition of existence of capitalism, it has become a commonplace to think that free markets in general are a condition of existence of capitalism. This is very misleading, of course, since it is possible to have free markets in everything except labor power and not have capitalism in the presence of a wide range of free markets. (Indeed, the presence of free markets in labor (power) is a necessary but not sufficient condition to define a society as capitalist. Simply because the capitalist class process may exist in a society does not imply that this type of class process prevails over all others, in terms of numbers of workers involved, total output generated, or any number of other possible criteria. Similarly, the existence of instances of slavery would not define an entire society as a slave society, if this economic arrangement were not typical.) In the ante-bellum South of the United States, where there was even a free market in the buying and selling of human beings, the market in the buying and selling of human labor (power) was relatively underdeveloped. Most direct producers in the ante-bellum South were either slaves or self-employed producers, not capitalist wage laborers. Under the system of slavery, a large number of productive laborers in the southern states of the United States existed in a condition of servitude, living out their lives in work camps as the owned property of other human beings, despite the presence of free markets in most goods and services. Indeed, most of the products created by these slave laborers were sold in markets, where buyers and sellers were relatively free to interact and engage in exchange. And the ideology of free markets was also very strong in the ante-bellum South. For slavery based entrepreneurs the freedom to engage in the buying and selling of human chattel and the concomitant freedom to put those human beings to productive use was no minor matter. Thus, there can be no doubt that markets played a critical role in the economic life of the southern states. Nevertheless, the predominant class process of the south, typically assumed to have been the slave class process (whereby the performance of surplus labor depended upon the existence of a human chattel arrangement) was clearly distinct from the capitalist class process (which prevailed in the northern states of the United States), whereby workers could seek and quit employment according to their own volition.

We can also see why it might have been possible to expand the role of ownership as a condition of existence of capitalism beyond the simple condition whereby it must be possible for someone other than the free wage laborer to take ownership of the surplus value created by that laborer (and then to distribute this surplus value so as to secure the conditions for further appropriations in the future). It is commonplace to believe that private ownership in general is a defining characteristic of capitalism. But again, slavery provided wide scale private ownership and yet is an economic arrangement profoundly different from capitalism. Similarly, feudalism and self-employment (the so-called ancient class process) often exist in the presence of wide scale private ownership.

Thus, neither private ownership or the existence of free markets in commodities other than labor power is, in these general terms, a sufficient condition for the existence of the capitalist class process. And since we call a society capitalist if and only if the capitalist class process prevails (is the predominant source of the social surplus), then the existence of such free markets and/or private property is not sufficient for a society to be labeled capitalist. It is also the case that the absence of wide scale free markets and private property are not sufficient to determine that a society is not capitalist.

As for the more ambiguous term, socialism, the intellectual and political leader of the Bolsheviks in Russia recognized that capitalism and socialism was not incompatible. On the eve of the Bolshevik Revolution of 1917, Vladimir Lenin wrote that “Socialism is nothing but a state-capitalist monopoly used for the benefit of the entire nation and thus ceasing to be a capitalist monopoly.” Thus, it appears that Lenin is defining socialism as a variant form of capitalism, rather than a different type of society from capitalism.

In support of Lenin’s argument, the existence of a command economy, wherein the allocation of goods and services is largely controlled by agencies of the government, does not preclude the presence of a free market in labor power per se and, therefore, does not preclude the continued prevalence of capitalist relations in the economy. But was this the case in practice? In particular, was it the case in China that the creation of a command economy was coincident with the establishment and/or reproduction of free labor (power) markets? Were Chinese workers free to choose their place of employment or, at least, to choose where they would seek employment?

In thinking about these questions, you should give some thought to the definition of capitalism developed in this brief essay. In particular, you might want to think about how a command economy could also be capitalist. In other words, as an exercise in deploying this strict definition of capitalism, you might define a capitalist command economy as one variant form of capitalism.

On the other hand, what if workers were not free to choose where they would seek employment? If workers were assigned by the government to a particular work site (danwe) and did not have the freedom to quit, then what sort of economic system, in class terms, would have prevailed in China? This question is of no minor importance to our investigation of the ongoing transformation of the Chinese economy and the implications of that transformation

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