Saturday, February 14, 2009
If we look at the entire country from a distance, during the period between 1978 and 1992 there were two great sectors: a public sector that was still largely based on socialist production relations and a private sector in which family production relations prevailed. Looking a little closer, in urban areas, the public sector was dominant, with a thriving family economy at the margins, while in rural areas, the family economy was dominant, with a growing township and village enterprise sector, which harboured both socialist and small-scale capitalist production relations. This was, indeed, a non-capitalist market economy, although it was changing quickly.
(...) Since 1992, much more radical market reforms have changed everything. Deng Xiaoping’s highly publicized tour of foreign-funded enterprises in southeast China’s special economic zones in early 1992 is conventionally cited as the key moment that marked the shift to more radical economic restructuring. After that, the ccp strongly encouraged the growth of the private capitalist sector and by the end of the decade it had presided over the privatization of the great majority of publicly owned enterprises. Between 1991 and 2005, the proportion of the urban workforce employed in the public sector fell from about 82 per cent to about 27 per cent (see Figure 1, below).
(...) This massive conversion of public into private property transformed managers into property owners and other work-unit members into disenfranchised proletarians. Work units in which previously both managers and workers had enforceable claims suddenly became the exclusive possession of the managers. In Marx’s language, labour power was separated from the means of production, as both were converted into commodities, and the responsibilities for production and consumption were severed.
(...) In order to retain some capacity to steer state-owned enterprises in line with political concerns, the ccp has held onto the power to appoint key state-sector executives, and government officials continue to use public holding companies to pursue state objectives that are broader than quarterly profits. Nevertheless, the structure of these enterprises has been fundamentally changed so that they are required—and able—to make profitability their primary goal. To accomplish this, they shed their previous obligations to their employees. Lifetime employment guarantees were eliminated, and enterprises not only reduced the size of their workforces but also discharged veteran workers and replaced them with younger workers who were less costly and more pliant. [13] State-owned coal mines, for instance, now engage contractors who compete to mine coal—using migrant labour—for the lowest cost per ton, a system that helps make Chinese coal mines the most dangerous in the world. [14] Enterprises have also closed unprofitable subsidiaries and removed themselves from the business of providing housing, health care, pensions, childcare, recreation, education and other services for employees and their families. Although these enterprises remain partly state-owned, the features that made them socialist have been eliminated.
(...) In 1978, China’s Gini coefficient (the measure used to compare international income inequality in which 0 indicates absolute equality and 1 absolute inequality) was calculated to be 0.22. This was among the lowest rates in the world. Observers were particularly impressed by it given China’s size and geographic diversity. The prc had accomplished this, despite large income differences between urban and rural areas and between more and less developed regions, because within each locality differences were minimal. Less than three decades later, in 2006, the figure was 0.496, surpassing the United States and approaching the rates of the world’s most unequal countries, such as Brazil and South Africa. [21] Inequality between regions and between rural and urban areas have both increased substantially, but the most dramatic change has been the polarization of income within localities.
(...) The data in Figure 2 indicate that all urban residents, including those at the bottom, now enjoy substantially higher incomes. These figures, however, only record cash income and, therefore, mask the loss of goods and services that had been distributed by the state and work units rather than the market, including subsidized housing, utilities, foodstuffs, household necessities, health care and education. The inadequacy of using cash income to gauge well-being across the structural transformation from a socialist to a capitalist economy becomes clear if one compares the income of the best-off urban households in the mid-1980s with that of the poorest households today. The former group, made up of managerial and professional cadres, lived in well-appointed apartments and enjoyed substantial economic comfort and security, even though they only had an average annual cash income of less than 1400 yuan; the latter group, made up mainly of unemployed or informally employed workers, despite having an average cash income of over 3800 yuan, live in deteriorating apartments, have trouble making ends meet, and avoid visiting the doctor.
(...) The sudden expansion of capitalist production relations since 1992 is what has made income inequality skyrocket in China. Before then, because the great bulk of economic activity was organized around the family labour and work-unit systems, which had responsibility for the consumption of their members, the growth of inequality was structurally constrained. The recent reforms have removed those constraints.
(...) That the current configuration of power in China may appropriately be called a capitalist state is confirmed by the government’s strong support for the expansion of the capitalist sector. Capitalist encroachment on the family labour sector and the relentless displacement of small enterprises by larger ones is fundamentally market-driven, but it is also state policy. China’s political leaders do not want backward produce markets, they want modern supermarkets, and state officials are expected to identify and support ‘winners’ in the economic competition. This expectation extends from the Political Bureau, which grooms national champions, down to county and township cadres, who are inveterate boosters of successful local enterprises. Under these conditions, it is difficult to distinguish, whether conceptually or empirically, state development strategies from the pecuniary interests of government officials and large-scale entrepreneurs, who are linked by myriad family and other ties.
(...) Arrighi correctly stresses the importance of China’s peculiar system of rural land tenure, which has barred individuals from selling land, preventing wholesale expropriation of the peasants’ means of subsistence. These laws have protected the family labour system in agriculture from capitalist encroachment, but they have not been at all incompatible with the operation of capitalist production relations in the rest of the economy, and they have permitted significant capitalist inroads in the most profitable areas of the agrarian sector. Although many entrepreneurs have certainly felt stymied by these laws, and employers of migrant labour will welcome the further influx of itinerant workers that the sale of land-use rights will produce, the land-tenure system established in the 1980s has served the broader interests of capital. For it has not only averted the social instability associated with huge landless populations, but has also allowed rural subsistence production to subsidize the employers of migrant workers, and a reserve army of rural labour to fluctuate in accord with the changing requirements of capitalist production. In fact, while the ccp’s recent decision to promote the sale of land-use rights might now permit capitalism to flourish in the countryside, it may also help to destabilize the larger system.
(...) Arrighi is right to highlight characteristics that are part of the country’s socialist legacy: a population that enjoys relatively good education and health, and a peasantry that retains possession of the land. These, however, do not change the fact that the sector of the economy that is growing most rapidly and successfully competing in international markets operates according to capitalist principles. Indeed, the enterprises in this sector are able to compete successfully because they are capitalist. Chinese entrepreneurs and their foreign partners, with strong and effective state support, have created what is—for the moment at least—the world’s most efficient system of extracting surplus labour. The features that make this system competitive in the global marketplace are the same that are producing ever greater class polarization in China.
(...) Since 1992, much more radical market reforms have changed everything. Deng Xiaoping’s highly publicized tour of foreign-funded enterprises in southeast China’s special economic zones in early 1992 is conventionally cited as the key moment that marked the shift to more radical economic restructuring. After that, the ccp strongly encouraged the growth of the private capitalist sector and by the end of the decade it had presided over the privatization of the great majority of publicly owned enterprises. Between 1991 and 2005, the proportion of the urban workforce employed in the public sector fell from about 82 per cent to about 27 per cent (see Figure 1, below).
(...) This massive conversion of public into private property transformed managers into property owners and other work-unit members into disenfranchised proletarians. Work units in which previously both managers and workers had enforceable claims suddenly became the exclusive possession of the managers. In Marx’s language, labour power was separated from the means of production, as both were converted into commodities, and the responsibilities for production and consumption were severed.
(...) In order to retain some capacity to steer state-owned enterprises in line with political concerns, the ccp has held onto the power to appoint key state-sector executives, and government officials continue to use public holding companies to pursue state objectives that are broader than quarterly profits. Nevertheless, the structure of these enterprises has been fundamentally changed so that they are required—and able—to make profitability their primary goal. To accomplish this, they shed their previous obligations to their employees. Lifetime employment guarantees were eliminated, and enterprises not only reduced the size of their workforces but also discharged veteran workers and replaced them with younger workers who were less costly and more pliant. [13] State-owned coal mines, for instance, now engage contractors who compete to mine coal—using migrant labour—for the lowest cost per ton, a system that helps make Chinese coal mines the most dangerous in the world. [14] Enterprises have also closed unprofitable subsidiaries and removed themselves from the business of providing housing, health care, pensions, childcare, recreation, education and other services for employees and their families. Although these enterprises remain partly state-owned, the features that made them socialist have been eliminated.
(...) In 1978, China’s Gini coefficient (the measure used to compare international income inequality in which 0 indicates absolute equality and 1 absolute inequality) was calculated to be 0.22. This was among the lowest rates in the world. Observers were particularly impressed by it given China’s size and geographic diversity. The prc had accomplished this, despite large income differences between urban and rural areas and between more and less developed regions, because within each locality differences were minimal. Less than three decades later, in 2006, the figure was 0.496, surpassing the United States and approaching the rates of the world’s most unequal countries, such as Brazil and South Africa. [21] Inequality between regions and between rural and urban areas have both increased substantially, but the most dramatic change has been the polarization of income within localities.
(...) The data in Figure 2 indicate that all urban residents, including those at the bottom, now enjoy substantially higher incomes. These figures, however, only record cash income and, therefore, mask the loss of goods and services that had been distributed by the state and work units rather than the market, including subsidized housing, utilities, foodstuffs, household necessities, health care and education. The inadequacy of using cash income to gauge well-being across the structural transformation from a socialist to a capitalist economy becomes clear if one compares the income of the best-off urban households in the mid-1980s with that of the poorest households today. The former group, made up of managerial and professional cadres, lived in well-appointed apartments and enjoyed substantial economic comfort and security, even though they only had an average annual cash income of less than 1400 yuan; the latter group, made up mainly of unemployed or informally employed workers, despite having an average cash income of over 3800 yuan, live in deteriorating apartments, have trouble making ends meet, and avoid visiting the doctor.
(...) The sudden expansion of capitalist production relations since 1992 is what has made income inequality skyrocket in China. Before then, because the great bulk of economic activity was organized around the family labour and work-unit systems, which had responsibility for the consumption of their members, the growth of inequality was structurally constrained. The recent reforms have removed those constraints.
(...) That the current configuration of power in China may appropriately be called a capitalist state is confirmed by the government’s strong support for the expansion of the capitalist sector. Capitalist encroachment on the family labour sector and the relentless displacement of small enterprises by larger ones is fundamentally market-driven, but it is also state policy. China’s political leaders do not want backward produce markets, they want modern supermarkets, and state officials are expected to identify and support ‘winners’ in the economic competition. This expectation extends from the Political Bureau, which grooms national champions, down to county and township cadres, who are inveterate boosters of successful local enterprises. Under these conditions, it is difficult to distinguish, whether conceptually or empirically, state development strategies from the pecuniary interests of government officials and large-scale entrepreneurs, who are linked by myriad family and other ties.
(...) Arrighi correctly stresses the importance of China’s peculiar system of rural land tenure, which has barred individuals from selling land, preventing wholesale expropriation of the peasants’ means of subsistence. These laws have protected the family labour system in agriculture from capitalist encroachment, but they have not been at all incompatible with the operation of capitalist production relations in the rest of the economy, and they have permitted significant capitalist inroads in the most profitable areas of the agrarian sector. Although many entrepreneurs have certainly felt stymied by these laws, and employers of migrant labour will welcome the further influx of itinerant workers that the sale of land-use rights will produce, the land-tenure system established in the 1980s has served the broader interests of capital. For it has not only averted the social instability associated with huge landless populations, but has also allowed rural subsistence production to subsidize the employers of migrant workers, and a reserve army of rural labour to fluctuate in accord with the changing requirements of capitalist production. In fact, while the ccp’s recent decision to promote the sale of land-use rights might now permit capitalism to flourish in the countryside, it may also help to destabilize the larger system.
(...) Arrighi is right to highlight characteristics that are part of the country’s socialist legacy: a population that enjoys relatively good education and health, and a peasantry that retains possession of the land. These, however, do not change the fact that the sector of the economy that is growing most rapidly and successfully competing in international markets operates according to capitalist principles. Indeed, the enterprises in this sector are able to compete successfully because they are capitalist. Chinese entrepreneurs and their foreign partners, with strong and effective state support, have created what is—for the moment at least—the world’s most efficient system of extracting surplus labour. The features that make this system competitive in the global marketplace are the same that are producing ever greater class polarization in China.
Wednesday, February 11, 2009
The United Nations High Commissioner for Refugees (UNHCR) is expanding its relief operation to assist those fleeing fighting, which the world body estimates currently stands at 450,000 people, but could climb to 600,000 shortly, in north west Pakistan, the UN agency said.
Sunday, February 8, 2009
IPS: In this context, how do you see the Israeli attack on Palestine?
WB: I have held all along that there are certain key struggles that the WSF must take a very strong stand on. Definitely, the Palestinian issue is one of them. The WSF should take a very strong stand condemning Israel and supporting the right of Palestinians to their own state, and supporting the right of return of Palestinians to what is now Israel. I really feel the WSF can no longer say that we just want to provide a roof for discussions to take place. I have always said that that kind of academic posture will eventually dissipate the spirit of the WSF, and I think that has already happened to some extent. To really reinforce its soul and continue to provide a strong kind of energy in support of civil society movements, the Palestine issue, and Afghanistan, the issue of capitalism really - these are issues in which the WSF must take a very strong stand.
IPS: Such an approach demands a permanent structure.
WB: Yes, I think that we should find ways of really making the International Council a more accountable body. The problem now with the IC is that it is mainly a discussion group rather than a body with real effective powers to move the struggle on.
WB: I have held all along that there are certain key struggles that the WSF must take a very strong stand on. Definitely, the Palestinian issue is one of them. The WSF should take a very strong stand condemning Israel and supporting the right of Palestinians to their own state, and supporting the right of return of Palestinians to what is now Israel. I really feel the WSF can no longer say that we just want to provide a roof for discussions to take place. I have always said that that kind of academic posture will eventually dissipate the spirit of the WSF, and I think that has already happened to some extent. To really reinforce its soul and continue to provide a strong kind of energy in support of civil society movements, the Palestine issue, and Afghanistan, the issue of capitalism really - these are issues in which the WSF must take a very strong stand.
IPS: Such an approach demands a permanent structure.
WB: Yes, I think that we should find ways of really making the International Council a more accountable body. The problem now with the IC is that it is mainly a discussion group rather than a body with real effective powers to move the struggle on.
The interim government, built from a coalition of the Left-Green Party and the Social Democrats, is at least as different from the old one as the Obama administration is from the Bush administration. The latest prime minister, Jóhanna Sigurdardóttir, broke new ground in the midst of the crisis: she is now the world's first out lesbian head of state. In power only until elections on April 25th, this caretaker government takes on the formidable task of stabilizing and steering a country that has the dubious honor of being the first to drop in the current global meltdown. Last week, Sigurdardóttir said that the new government would try to change the constitution to "enshrine national ownership of the country's natural resources" and to "open a new chapter in public participation in shaping the structure of government," a 180-degree turn from the neoliberal policies of Iceland's fallen masters.
The voting shows that Mr Maliki and his Dawa party are stronger but the significance can be exaggerated. Although he fought a secular campaign, on important decisions Mr Maliki does not generally act without seeking the opinion of the Shia Grand Ayatollah Ali al-Sistani. The election has also been painted as a setback for Iranian influence but Mr Maliki is still going to keep close relations with Tehran while remaining on good terms with the US. One test of the success of the election will be how far the results are accepted by the losers.
Benjamin Netanyahu will apparently be Israel's next prime minister. There is, however, something encouraging about that fact. Netanyahu's election will free Israel from the burden of deception: If he can establish a right-wing government, the veil will be lifted and the nation's true face revealed to its citizens and the rest of the world, including Arab countries. Together with the world, we will see which direction we are facing and who we really are. The masquerade that has gone on for several years will finally come to an end.
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