By Richard D. Wolff
The economy of the People’s Republic of China has
been growing much faster than that of the United
States for decades. So too has China’s average real
wage. China is now the world’s second superpower,
catching up to the United States economically if not
(yet) militarily. Its political influence grew
alongside its GDP. Where once the chief scapegoat
for the U.S. was the USSR/Russia, China has replaced
the latter in that position. The global tourist
industry courts Chinese big spenders.
China’s technical
advances continue to amaze and impress most of the
world.
The basic story here replicates in large part the
story of the United States and the British Empire.
The United States was once a mere colony, humiliated
as well as economically abused by its colonizer.
China suffered similarly at the hands of its
colonizing abusers, although it was able to avoid
formal colonial status, except for some enclaves.
Resentment and bitterness accumulated in the
American revolutionary break from its colonial
status in the late 18th century. The same happened
in China in the middle of the 20th. In the War of
1812, the new United States proved that the British
Empire could not undo the American Revolution. In
the Korean War, the new People’s Republic of China
proved that the U.S. empire could not undo the
Chinese Revolution.
Independence unleashed rapid economic growth in
the United States, which caught up to and overtook
its colonizer economically across the 19th century.
World War I marked the reversal of roles between the
United States and the UK. On many levels—political
and cultural as well as economic—the dominator and
the dominated changed places. Across the 20th
century, the United States displaced (and itself
replaced) the British and other European empires to
become the global hegemon. After stumbling badly in
the Great Depression, it responded with the New
Deal’s burst of social democracy. On that basis, the
United States undertook to make the rest of the
world copy what it labeled a “people’s” or a
“welfare” capitalism that represented the epitome of
human development. By the beginning of the 21st
century, critics labeled UK Prime Minister Tony
Blair as “America’s poodle” for his slavish
subordination to the George W. Bush regime in the
United States.
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China’s 1949 revolution likewise unleashed a
stunning economic recovery from the sequential
scourges of Japanese invasion, World War II, and the
civil war. The economic recovery enabled a political
maturation that transformed the Chinese Communist
Party and the People’s Republic of China from
disciples of the Soviet Party and of the USSR into
equals with their own agenda, values, and
interpretation of Marxism. Culturally, China gained
a remarkable self-confidence as an awakening giant
retaking its hegemonic position in Asia and beyond
that in the entire world. Changing global conditions
and a certain exhaustion of the recovery phase of
its development led China to change course with Mao
Zedong’s passing. It crafted a new Chinese economy
and labeled it socialism with Chinese
characteristics.
Not only did that economy achieve the
unprecedented growth feats mentioned above, but it
also did so without most of the foreign aid given to
many other developing nations. The active enmity of
the United States imposed that deprivation on China.
It thereby also made self-reliance a crucial basis
for China’s development. For the last half-century,
China has been a model of how a determined
developing nation can mobilize its surplus for
development. China’s workers produced a surplus used
primarily to build and expand the Chinese economy
via huge investments in infrastructure, industrial
capacity, productivity growth, education, and
research and development. This deliberate investment
program continued even after China opened itself to
(1) foreign private capitalist investments, (2)
private Chinese capitalist enterprise development
and growth, and (3) partnerships between them. The
Chinese Communist Party and the Chinese state
apparatus controlled and maneuvered the resulting
acceleration of surplus production to tilt
investments toward the growth goals set by the party
and the state. China’s surplus was also used,
secondarily, to reproduce the complex class
structures of private and state enterprises and of
foreign and domestic private capitalists, and
finally to undertake the regulation of markets and
governmental economic planning.
Today, the challenge offered by China to the
United States and indeed the capitalist world
economy is a model that departs sharply from the
private laissez-faire model of capitalism that has
prevailed in global capitalism to date. In the
latter model, the government is called in (à la
Keynes) only when crises hit and threaten private
capitalism. And then the government’s economic
interventions are constricted in scope and reach and
are temporary in time. Minimal government regulation
and minimal direct production of goods and services
by government are the key rules.
In contrast, in China, the Communist Party and
the state intervene much more in economic affairs by
regulating private businesses (foreign and domestic)
more and also by having the state own and operate
businesses. What results for the party and the state
is an overarching control of economic development.
That control, in its extent and duration, far
exceeds the governments’ role in western Europe,
North America, and Japan. Having the party and state
as collaborative entities pushing determined
policies enables the regular mobilization of most
private and public resources to achieve agreed
goals. Chief among the goals has been economic
development to escape the endemic poverty of
southern Asia. The mobilization to stop the spread
of COVID-19 via lockdowns in Wuhan and elsewhere was
another example. So too was the achievement of
technical parity with and sometimes superiority to
the United States in many fields.
Keynesian economics enjoyed a meteoric rise
within the discipline of economics when it enabled
government policies clearly to assist capitalism’s
survival and recovery from the 1930s Great
Depression. Neoclassical economics could return to
dominance within the profession in the 1970s when it
enabled government policies (neoliberalism) clearly
to assist in rolling back the Keynesian regulations
of and constraints on private capitalists (such as
the New Deal and social democracy). China’s
remarkable economic growth over the last 30-40 years
will likely provoke and be further enabled by
corresponding developments in the discipline of
economics. These will entail the rediscovery,
embrace, and strengthening of governments’ economic
interventions as means to achieve socially
prioritized goals.
As denials of what China continues to accomplish
economically lose their rhetorical power, attention
likely will turn increasingly to the Chinese model,
to exploring whether and how the capitalisms of
western Europe, North America, and Japan can learn
from and coexist with China. Demonizations and
threats (a new cold war) directed at real and false
political and cultural problems in China will also
likely fade in favor of mutual accommodation with
China. Chinese leaders have made clear their view
that they have accommodated and will continue to
accommodate trade with and investments by private
capitalists alongside and interacting with
enterprises owned and run by the state. That was an
engine of their remarkable development, and they see
no reason to change that approach.
It is rather parts of the United States that
consider a military confrontation with China as
needed and rationally possible now. If it happens,
the Chinese will see it for what the United States
has in fact opposed, namely the continuation of the
power of the Chinese Communist Party and the social
structure over which it and the Chinese state
preside. The Chinese leadership has said it will
fight that totally.
China has more than four times the population of
the United States. Its economy’s total output may
well surpass that of the United States in a few
years. Its global political influence is rising
fast. Allies of the United States must increasingly
rethink their foreign relations in light of China’s
ascendancy. Meanwhile, the economic problems of the
United States (such as instability cycles,
inequalities of wealth and income, political
divisions, and explosive debt accumulation) mount.
The ability of the United States to change China, to
move it away from the path and structures that took
it so far and so fast, has proved less than
impressive to virtually everyone who pays attention.
Ratcheting up demonizations of China seems a poor
and likely counterproductive response. Yes, it does
replicate the demonization of the USSR that served
effectively to cover the rollback of the New Deal.
But for the United States to roll back another
country’s progressive period is a project quite
different from doing that domestically. Also, the
conditions (economic, political, and cultural) of
today’s world differ drastically from those after
1945. Yet Biden’s repetition of post-1945 Cold War
policies is much closer to that original than his
economic policies are to those of Franklin Delano
Roosevelt. And that will prove to be exactly the
reverse of what today’s crisis needs.
Richard D. Wolff is professor of economics
emeritus at the University of Massachusetts,
Amherst, and a visiting professor in the Graduate
Program in International Affairs of the New School
University, in New York. Wolff’s weekly show,
“Economic Update,” is syndicated by more than 100
radio stations and goes to 55 million TV receivers
via Free Speech TV. His three recent
books with Democracy at Work
are The Sickness Is the System: When Capitalism
Fails to Save Us From Pandemics or Itself,
Understanding Marxism, and Understanding Socialism.
This article was produced by
Economy for All, a project of the
Independent Media Institute.
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