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While we are putting the boot into to the Chinese regime, there’s this. A bit unfair, I admit, like kicking a man when he’s down or taking a candy from a baby.
“President Xi was facing the most serious test of his approach to Chinese capitalism last night as Beijing decided whether it could allow a corporate giant burdened with hundreds of millions of debt to go bankrupt” (Times, 21 September).
The Chinese government still occasionally calls itself socialist, though this is more common amongst its fellow travellers and useful idiots abroad. Everybody can see it isn’t, even the Western media as in the news item above. Its economy is ‘state capitalist’ even in the Leninist sense of the development of private capitalism under the aegis of a supposedly ‘socialist’ state. Lenin, however, envisaged only small-scale capitalist enterprises. The Chinese government has allowed and encouraged big corporations to develop and so finds itself in the position of having to cope with problems caused by the workings of a market economy involving big capitalist corporations.
The ‘corporate giant’ that risked going bankrupt is a property company with the wonderful name of Evergrande that epitomises what every capitalist enterprise has to aim at – growing bigger and bigger through the re-investment of most of its profits as new capital.
Founded in 1996, it expanded rapidly in response to a housing boom, borrowing heavily to meet the demand for new apartment blocks. Then, as always happens sooner or later, the boom turned to bust.
The anarchic expansion of the market led to an oversupply of residential property:‘Supply of apartments exceeds demand and many new apartment blocks stand empty or unfinished’ (Times, 21 September).
‘By some estimates, China now has 90 million units of empty houses’ (Simon Nixon, Times, 23 September).
The oversupply is in relation to paying demand not need:
‘ … there are the very high vacancy rates in China with high prices. In cities such as Beijing, Shanghai and Shenzhen property values are “very extreme” relative to average incomes’ (Patrick Hoskings, Times, 21 September).
Evergrande has been left with huge debts that it cannot meet. The fear amongst stock exchange speculators is that its collapse would be China’s ‘Lehman moment’, as in the US in 2007-8 that provoked the Great Recession from which the world has still not fully recovered. They are afraid that the failure of Evergrande would spread from it to its suppliers and from them to their suppliers and so on, and of the impact of the resulting generalised economic crisis in China on the rest of the world capitalist economy.
It might not come to this, but the point is that it could. This shows that the Chinese government, despite being a one-party dictatorship, is as much at the mercy of unpredictable, anarchic market forces as any elected reformist government in the West.
Chairman Xi is finding that capitalism is not a paper tiger.
Here is a silly government handout trying to sell the recent UK-Australia trade deal to the general public.
As can be seen, only 44% of exports are goods and 56% are services, most of which will be financial or legal. Since the UK basically only exports luxury products to Australia (top of the range cars, whisky, ceramics) as Australia can get ordinary stuff from much nearer (including ordinary cars), the main beneficiaries will be the financial sector.
Since higher transport costs are involved in exporting ordinary goods to places further away than the Continent, the main beneficiary of trade deals with further away countries is going to be the financial sector.
Those financiers who funded the No campaign will be satisfied with that, won’t they? And of course the threat of having to submit their financial dealings to stricter, EU rules has been removed.
As to workers, we get a wider choice to buy Australian wine (that comes by sea in huge tanks) and vegemite. Big deal !
How China solves the housing problem.
This article makes some relevant points about Western leftists romanticising the current regime in China. To add to the dossier, so we get all points of view.
The comments section is also interesting.
Even those manufacturing and retail capitalists who backed Brexit are turning on Johnson for blaming business for relying on low wage immigrant labour and telling them to pay their workers more instead. They are saying he is “economically illiterate” and that “restricting migration could lead to higher inflation as increased costs would be passed on to the consumer” (“would be” is a bit of an exaggeration; “will be if market conditions allow” would be more accurate).
Mind you, inflation would lead to higher money wages.
The financiers who funded the Brexit referendum campaign are not saying anything.
Actually, all reformist politicians with their wild promises tend to be economically illiterate, but it true that Boris the Clown is more so than most.
Headline in yesterday’s “All Britain’s electricity to be green by 2035”. When you read the article it is clear that nuclear power is also included. It never used to be called “green”. In fact, it was “Greens” that used to protest against nuclear power stations and try to stop them being built.
Even in socialism nuclear power would probably have a role to play as an alternative to burning fossil fuels, but it does seem strange to describe it as “green” in view of other problems it creates for the environment even if these can be mitigated.
Actually Khrushchev said in 1960 that Russia would achieve communism by 1980, in only 20 years time:
“Communism in 20 years” was a slogan put forth by Nikita Khrushchev at the 22nd Congress of the Communist Party of the Soviet Union in 1961. Khrushchev’s quote from his speech at the Congress was from this phrase: “We are strictly guided by scientific calculations. And calculations show that in 20 years we will build mainly a communist society”.The slogan refers to the establishment of a classless, moneyless, stateless society rather than a Marxist-Leninist state.
In his speech, Khrushchev promised that communism would be built “in the main” by 1980. His phrase “The current generation of Soviet people will live under communism” was the final phrase of the new Program of the CPSU adopted at the congress.”
It does say “what’s left of the aristocracy”, a reference presumably to the hierarchy of dukes, earls, marquesses and barons, at the top of which is the monarch. All that’s left over from feudalism.
Of course most aristocrats are now capitalists, even though some of them are still great landowners a part of whose income is ground-rent.
Even the Fabians didn’t think it would take a 170 years (1949-2121) to gradually transform capitalism into socialism. That would require the Labour Party to win about 40 general elections one after the other.
Pity that claim that the current Chinese dictator had said that the higher phase of communism/socialism (the same thing) would not be possible for another 100 years turned out to be false. But he wasn’t as pessimistic as Lenin who is reported to have said, “If Socialism can only be realised when the intellectual development of all the people permits it, then we shall not see Socialism for at least five hundred years” (From a speech in November 1918 quoted by John Reed in Ten Days that Shook the World).
The idea that an intellectual minority can seize power and then educate people to become socialists has proved wrong in practice not just in theory. It was never going to work, not only because you can’t force people to be socialists but in the meantime you have to try to manage the capitalist economy and that can’t be made to run in the interests of the workers. What happens is that the so-called intellectual minority (or some of them) evolve into a new privileged exploiting class.
Isn’t he the person who wants to “reset” capitalism ?
For those unable to wait a month to see, here’s an extract from the article:
“the mention of ‘government controlled ‘banks’ and ‘higher wages and benefits’ makes it even clearer that what is in fact being proposed is not an entirely different kind of society from the present capitalist one but rather a varied form of it, with the hope that it will be more benign. But this is not a socialist society, since, by definition, socialism must be a society (and a world society, not one with the US-centred focus the author seems to be presenting) without governments, without buying and selling, and certainly without banks. So long as there are these elements – money, banks, buying and selling – there will be what David Klein himself correctly sees as being at the core of capitalism, surplus value, even if it is the state rather than private individuals that takes on the task of generating the surplus as capital for investment.”
So, an illusory eco-capitalism rather than eco-socialism.
