“Hide and Bide”

or

Did China really rise without trace?

At the 2017 Chinese Communist Party congress, Xi Jinping openly broke with Deng Xiaoping’s 1990 maxim for the Chinese Communist Party: “Hide your strength and bide your time.”    According to Xi, China was now in a “period of strategic opportunity.”   This may have been a reference to Trump’s recent election to the US presidency and the UK Brexit decision weakening the European Union.   The term had been used by previous Chinese leaders at times when the US was particularly distracted by other matters.   At any rate, Xi said that it was “time for [China] to take centre stage in the world.”

The nearly five years since have seen overt Chinese and American antagonisms magnify considerably.   The situation is important for several reasons:  materially, because it constitutes a major component of the power framework within which humanity lives, and theoretically, because the development of China over recent decades gives us an opportunity to assess how well our analyses have dealt with the reality of capitalist economic development historically.

The comrades who left the ICC in 1985 and formed IP at the time defended the ICC’s economic analysis of capitalism, the key element of which was that the current epoch of decadent capitalism was putting a brake on the development of the productive forces.   As the years passed, we saw that the development of capitalism’s productive forces was accelerating and this recognition contributed to a reassessment of the theoretical underpinnings of the notion of decadence in capitalism.  By 2016, IP’s new reference text had no mention of decadence.   Other texts of the time talked of us “living in a phase of social retrogression”; but the questions of ‘what had changed?’ and ‘why did it change?’ remained.   Additionally, it is worth pointing out that old ideas can linger on in different guises; sometimes they cast shadows and create blind spots.   IP’s analyses of modern China over the past thirty-five years illustrates such a problematic.

The first description of China’s trajectory made by IP in 1986 was that it was being integrated into the US bloc, a process that Russia was trying to slow down.   Also, the agreement to return Hong Kong to China was seen as strengthening its links with the UK.   (Remember, the Cold War was still going strong.)   In the 1990s, IP used the fact of China’s rapid industrialisation against the ICC’s concept of decadence.   But, at the same time, it was argued that the crushing weight of debt made any significant global economic recovery impossible.   In 1998, while acknowledging the possibility of Chinese development in the context of the Asian crisis IP argued that the inconvertibility of the Chinese currency limited its export market access.   By the early 2000s, IP noted that China was becoming the biggest manufacturing centre in the world and that its growth had been prodigious.   However, in 2007 it was argued that China was stuck and that it couldn’t spend capital freely on national development.  The cutting edge of capitalist production was not in China but in the US, Western Europe and Japan.   Furthermore, it was a myth that China was catching up like Germany and the US in the 19^th Century.   Such were IP’s main assessments of Chinese economic development in the printed publication between 1986 and 2007, just before the global financial meltdown.

Subsequently, in 2011, IP did go so far as to say that the Chinese economy had saved capital from drowning over the previous quarter of a century – while pointing out that it had not prevented capital from descending into its worst crisis since the 1930s; however, its beneficial effect was diminishing both as a source of surplus value and as a market.   Then, in the following years, China went on to more than double its GDP.   In 2007, the UK’s economy was bigger than China’s.   Yet, as of 2020, China’s economy had become seven times the size of the UK’s.   Have we missed something?   It appears we have; Deng’s ‘hide and bide’ has been very effective.

I am reminded of a comment made by an academic (David Banach concerning Who Killed Substantial Form) albeit on a different matter: “I am in the unenviable position of a rookie cop watching a skilled detective and an expert medical examiner examining a body, formulating intricate and ingenious theories about the possible timing and cause of death, but being forced to point out the large axe protruding from the patient’s skull.”   China has taken a sharp instrument to western capitalism, to geopolitical balance, and to Marxist theorists’ views on what is or is not possible.   We can’t do anything about the first two but we can – and must – do something about the third.   Why?

We must because we have not simply been fooled by Deng.   This is not only an issue of being blind to the significance of an aspect of empirical reality; it goes to the heart of a Marxist analysis of the capitalist economy.   If we claim to have an analysis of the development of the global capitalist economy it must examine the economy at that global level.  It is a self-deception to portray the global economy as if it were only the West with other parts of the world merely hanging on.   That may have appeared to have been the situation sometime in the past but has surely not been a credible description of reality for decades now.

It should be obvious that a methodology is flawed when it leads us over a period of years to say that certain developments can’t take place, that they are mythical, and when they actually happen the previous denial is ignored.

Deng was hiding much more activity than the level of domestic economic development, and Xi has doubled down on the many activities that had been underway.   Now his Major Country Diplomacy reveals integration of many aspects of politico-economic activity covering the Wolf Warrior diplomacy, the Belt and Road Initiative (the Silk Road Economic Belt and the 21^st Century Maritime Silk Road) covering widespread infrastructural developments, the soft power global reach of the United Front Work Department and, of course, the massive build-up of military forces and distant bases.   And, as if to further the rapprochement with Russia since 1991 an extension to their friendship and cooperation treaty was signed this year; joint army exercises have been taking place for some years and this year (for the first time) joint naval exercises have been conducted.    The geo-political and geo-economic frameworks have changed fundamentally since the collapse of the Soviet Union.

It seems to me that there were several sources of error, including biases inherited from previous analytical beliefs.   One was the legacy of the ICC’s concept of decadence being a brake on the productive forces.   Another was the associated legacy belief that what was known as the ‘third world’ could not develop its production capacity substantially.   Yet another was the assumption that the capitalist world was essentially North America and Western Europe; this was an inexplicit assumption and may also have been linked to some vestiges of the Frankfurt School influencing early practitioners of the Neue Marx-Lektüre.   Along with these were assumptions about the theoretical tools that could be used:  that the functioning of the capitalist economy could be analysed solely using broad movements of exchange value, ignoring the activities of institutions – organisational and contractual – that house these activities constructed and dismantled as required by major players: involving states. major companies and complex networks.   These institutions are the structures within and through which capitalism has found the means to further its real domination over all aspects of human life.   Not giving such developments their due weight in (our) analysis leads us to serious self-delusions.

There have also been errors of omission.   One concerns the huge increases in production in the East, from India through the Asian tiger economies and to China which now account for an enormous proportion of the capitalist economy.   East Asia now accounts for about one-third of world GDP; an interesting outcome for something that couldn’t happen.   China has not been stuck..   It has gone through an economic development – all pushed by the anti-democratic, dictatorial state – from the breaking-up of autarky, through low tech, production displacement from the West, through mimicry (and theft) to technological inventiveness.

(A related error is to neglect the theoretical analysis of the historical evolution of the role of money in capitalism.   Only an ever-diminishing proportion of money movements today is used to make or receive payments for material or service commodities.   Massive movements of capital can now be accomplished in minutes.   For the economic system, this means that states and large companies can transfer and apply their power where and when they wish.   Likewise, we must deepen our analysis of what money is.   In Capital v1, Marx takes money to be gold or silver and its use as world money is to make or receive payments, and to transfer wealth.   But money today is fiat money, no longer based on a gold standard, and its functioning is essentially underpinned by the US dollar.   This money change signifies deep changes in capitalism since Marx’s time and cries out for thoroughgoing analysis.   And then there is cryptocurrency ……..)

In case any reader is in doubt, let me stress that there are no ‘sunlit uplands’ for Chinese capital nor for global capitalism as a whole.   Capitalism’s whole historical trajectory has been punctuated by crises, financial and material, revolts and wars, local and global.   The above comments are concerned with how capitalism’s prospects were viewed over past decades; they do not give predictions for the future.   Indeed, the economic problems confronted by the Chinese state today are similar to those confronted by the American state:  real estate markets over-heating with financial bubbles swelling, antagonisms with the power of Big Tech, supply chain problems, rising labour costs, inflation, etc.   By arguing that, over the past decades, capitalism has found mechanisms to tackle certain problems does not lead to the conclusion that capitalism can do anything it wants.

All in all we need a reset, theoretically speaking.   It would do us no ill to review our work to see what we’ve got right and what wrong.   And if we were to edit our text on ‘The World As We See It – Reference Points’ we might include a better description of China than as a ‘living fossil’.

Marlowe

9 January 2022