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Making Capitalism in China for Dummies: The Video
by Satya J. Gabriel
I’ve argued in this
essay series that China is undergoing
an economic (class) revolution from a feudal to a capitalist social
formation. I've rooted
this controversial argument in definitions of feudalism and
capitalism based on the production, appropriation, and distribution of the
surplus fruits of labor. Nevertheless, in most people's minds, feudalism is a thing of the past, a particular
past, in fact, and so is the transition from feudalism to
capitalism. Both are now the province of historians, not social
scientists (as epitomized by the pitiful excuse for a discussion of
feudalism that can be found on Wikipedia). And understanding capitalism
is just as problematic, with many people thinking capitalism is having the freedom to go to
baseball games on the weekend or vote for the next president or be
able to sell an old tennis racket on ebay.
There are several popular series of publications in the U.S. that are
designed
to attract people who want to understand subject matter that is perceived
as too complicated for the average person to understand (perhaps because
those who normally write or teach on the subject matter speak in a private
language that is impenetrable by anyone not trained in the
jargon). One of these series claims to be "for dummies," another for
"idiots" and the oldest (I think) simply says the subject will be "made
easy." Given the difficulties in demystifying capitalism, perhaps
someone should create a do-it-yourself video called: Making Capitalism
for Dummies.
The first thing it should show, if it really wanted to
help all of us understand capitalism better, is that the term capitalism
has its origins in Marx's attempt to make sense of a particular type of
class process, which during his time was the next big thing. Perhaps the
second thing one should show is that there has never been a
generic approach
to creating capitalism (anymore than there was/is a generic set of
cultural
and political attributes that make feudal society possible). Those who
think
that capitalism requires very specific combinations of political,
cultural, or even
economic processes (in other words, those who believe there is only one
form of capitalism) would be mostly mistaken. For example, capitalism
doesn’t
need “free” markets, whatever the hay that means. Indeed,
if one
strictly defined free markets as requiring perfect competition (I
didn’t
create that term, the neoclassicals did), then there has never (and I do
mean
never) been free markets anywhere. And capitalism certainly does not and
never
has needed democracy (which seems to be more closely associated with
social
formations where large numbers of ancient (self-employed) artisans and
farmers
are or were concentrated). Sorry, Virginia, but there is no reason to
assume that the rise of capitalism will spark a democratic revolution in
China. Perhaps the video should highlight the many examples of prosperous
and less than prosperous social formations that are both non-democratic and capitalist as a way of
focusing viewers' attention on what is and is not fundamental about
capitalism. (The latest twist on the smoke-and-mirrors approach to
undefining capitalism, an earlier version of which equated democracy and
capitalism, is to talk as if prosperity = capitalism. I'm convinced that
many of the social commentators who invent these obfuscations do so
in a conscious effort to divert our eyes from the class roots of the term
capitalism.) This is not to say, however, that other social processes,
including many that predate the rise of capitalism, might not conspire to
promote more democratic processes of formulating public policy
(particularly in the villages of China where productive self-employment has been an
on-again, off-again, on-again phenomenon since the 1949 revolution).
Capitalism, as a class system, requires a class-based definition to allow us to
see its uniqueness. A Making Capitalism for Dummies video would
have to make this clear. I must warn you, however, that if you plan to
create the Making Capitalism video keep in mind that you will be
fighting against all the aforementioned obfuscations which, consciously or
unconsciously, divert our
attention away from the unique aspects of the social relationship at the
core of the concept (sort of as if slavery stopped being about the
relationship of slave to slave master and was defined as free markets or
democracy). Your task would be easier making a video designed to convince
PC users to adopt Linux as their primary operating system.
In any event,
what do we need to show in a Making Capitalism
video to get the viewers to see capitalism. The video has to show what
it is that makes capitalism unique and, to try and revive a beat horse,
that uniqueness comes from a very particular sort of social relationship
that results in surplus value being created and then taken control over by
non-workers. This relationship is, indeed, grounded in a
particular sort of market (not the mythological free market, mind
you). Capitalism requires
a labor market (or, more accurately, a market in the buying and selling
of labor
power --- the potential to perform labor). In Marxian theory, any
social relationship whereby workers produce surplus value that is taken
control over by non-workers is called exploitation. There are three
different kinds of exploitation, according to most versions of
Marxian theory: feudal, slave, and
capitalist. Capitalist exploitation
is unique because it is the only form of exploitation where the workers
freely
sell their labor power to others, while having the choice to not do
so. Thus,
capitalism needs markets where this capitalist freedom prevails or it
cannot
exist.
Let's assume you do want to make this video, recognizing the enormous
market potential or for artistic or scientific reasons or some combination
of these (or whatever). You could either do the general Making
capitalism video or you might narrow your approach to a specific case
of making capitalism. You could just do the British transition from
feudalism to capitalism. After all, Marx provides quite the blueprint in
his three-volume Capital and other writings, including journalistic
pieces. On the other hand, perhaps you want to join me in trying to
liberate thinking about capitalism (and feudalism) by taking up the
Making Capitalism in China case. I'm going to take a bit more
license and assume you are excited by this prospect and decide to make a
video titled Making
Capitalism in China for Dummies. Now that is very exciting,
indeed. Can't you see all the China watchers rushing down to Barnes and
Noble or getting online to Amazon.com ordering up their copies of your
video?
One of the steps you would need to show
in your video is the one where the system of allocating labor
in China is transformed
from the bureaucratic set-up under state feudalism to the more
free-wheeling,
make-you-own-choices approach of the capitalist labor market. This is
because
a key step in the transformation of China into a capitalist social
formation
is the expansion of capitalist labor markets and the creation of social
institutions
supportive of those labor markets (to risk further repetition, these
social
institutions are NOT generic, but are shaped in the unique environment
of the
social formation in question). The creation of such supportive
institutions
is necessarily coincident with the destruction of institutions
supportive of
state feudal labor allocation. So you would need to show the
bureaucratic allocation
system to give your viewers a sense of what needed to be
transformed/destroyed.
You might start by panning across the façade of a bland
governmental
building (although you risk evoking memories of Cold War propaganda
which is
not necessarily conducive to clarifying the underlying class
processes) and
then inside the offices where bureaucrats were formulating policies for
shaping
the lives of workers, including hiring quotas, compensation systems, and
workshop
regulations. You could provide a graphic that illustrated the
eight-grade pay scale that prevailed within the bureaucracy (that was
later expanded to fifteen pay grades). This pay approach is similar to
that within other governmental bureaucracies (including the
U.S. government) and, although this may divert attention from the feudal
nature of the overall system of exploitation, one might want to show the
way the Chinese pay grade system has a parallel in the U.S. bureaucracy.
Anyway, you might then edit together clips of various parts of the
bureaucracy to show the paper trail as the hiring quotas, compensation systems, and
workshop regulations were communicated to various parts of the bureaucracy,
including secondary schools, communal offices, provincial agencies, and senior
management
of state run enterprises (SREs) and their related factories and
workshops.
Perhaps if you wanted to pre-empt the attacks likely to come from those
who
argue that this state feudal bureaucracy represented socialism (and who
think
feudalism was a distasteful system populated by dour, unhappy workers),
you might show some
clips of secondary school graduates as they are assigned to jobs for
life or
of workers already toiling inside Chinese factories during the state
feudal
era. Are the faces of the workers beaming with the fervor often seen in
those
Mao-era posters? I doubt it. In any event, you are not going to convince
the
true believers by showing the faces of a few workers (or even a large
number
of workers), but it might be fun to do it in the video, just to give
those who
engage in debate with such devotees another piece of evidence to
deploy.
If you really want to reinforce this point about making capitalism out
of the stuff of feudalism, then you might want to show the way workers in
China were "tamed" by the feudal relationship, preparing the way for them
to become the "voluntarily" exploited under capitalist relations. Perhaps
it is precisely the creation of a tame, disciplined worker that
makes feudalism such fertile ground for capitalism, not that the
transition from feudalism to capitalism is natural or inevitable (as some
die-hard teleologists would have us believe). But history
has produced a culture, politics, and economics of such a transition and,
given the "fertility" of feudalism (it's production of a form of
discipline unknown to many other class processes, such as ancientism and
communalism), this may be sufficient to plant the seeds of
capitalism. The Making Capitalism video could easily show the
processes by which such discipline was formed in Chinese state
feudalism. The “pre-reform”
Chinese economic system was based in a mutual obligation of the employee
and the employer, creating in the worker bonds of feudal fealty and
dependence, and creating within the workplace the
subsumption of the individual worker to the discipline of a hierarchically
organized form of exploitation. You could have your narrator (preferably
James Earl Jones) read passages from any of a number of the
loci classici of feudal-era historiography (but don't use these words!) to
illustrate similar descriptions of other instances of feudalism (although
this might be a bit too much of a Ken Burns moment for a "made easy"
video).
The old system created
a strong sense of hierarchy (which might very well have served the early
capitalists), on the one hand, and a sense of marriage,
on the other hand. It was the sort of marriage that still has currency in
the Vatican: a marriage where neither party can initiate a divorce. The
one could not quit
and the other could not fire. The bonds of obligation were
permanent. Perhaps
you could show in time-lapse photography the life of a single state
feudal employee
who was assigned a posting at an SRE upon graduation from secondary
school,
through his life in a workshop and his gradual move up the seniority
ladder,
showing also the way his family life was intertwined with the life of
the SRE,
and culminating in his death. At every stage of this
workers’ life, the
bureaucracy is a key player, with most of his life dominated, in this
respect,
by the SRE component of that bureaucracy. The total immersion of the
worker
in the bureaucracy is reminiscent of other manifestations of feudal
social formations
(which some social scientists like to call a “total
institution”).
Perhaps one could find a clever way of showing the parallels, especially
the
way the foundational bond between worker and lord are typically based on
customary
(rather than formal contractual) ties of obligation or the way the
political
and economic are so intimately intertwined in a variety of
manifestations (variant forms) of feudalism.
You have now set the stage for the transition by showing key features
of the old system. You would then proceed to show how capitalism is built
from this existing structure (a process of creative destruction (if
the ghost of Schumpeter will please forgive me) to be sure).
Your narrator might say something
like: “Perhaps your
first step would be to remove these feudal bonds of obligation of the
worker
to the state-run enterprise, at one level, and of the enterprise to the
party-state
at the highest level of obligation, while at the same time shifting the
dependence of the worker on a specific enterprise to a dependence on the
system for his livelihood.” You might want to edit that
statement, break it down into three sentences instead of one to assist
your narrator. The audience would, no doubt, appreciate the
simplicity. And then you could show that breaking of feudal bonds and
transfer of dependence from a single lord to the larger system of
employers (choice!)
is precisely what has happened in China with the growth in capitalist
labor markets (complete with burgeoning unemployment options)
and the corporatization of firms that had been part of the
bureaucracy.
In capitalism, employment contracts are never permanent and
allow the
worker the freedom to quit and capitalist managers the freedom to fire
(or, as
an alternative, in the nuances of termination choices, to layoff). Your
video
might then show the process by which the enterprise is corporatized
(moving
from the official designation of guoying qiye or state-run enterprise to
guoyou minying or state-owned enterprises, indicating that
ownership is NOT the same
thing as direct control over the processes of surplus value
appropriation and
distribution). The new state-owned enterprise qua corporation (SOE) has
its own board of directors
and its managers are vested with the power to hire and fire. This is the
usual
contemporary structure within which capitalist exploitation takes place
and
would be quite familiar to most of those watching your how-to video.
To reinforce the point, perhaps you might want to show the process of
firing
taking place within an SOE. The shock on the faces of the workers (not
only
the one being fired), as well as the reaction of his family to this
strange
turn of history, would provide the viewers with a poignant reminder of
the radical
departure of this process from anything these individuals have known to
that
point, as well as an indication of their sense of betrayal with the
abandonment
of the familial-like ties that had prevailed under the state feudal
relationships. (see article from
China Daily --- link added 2 February 2004)
It might surprise your viewers to see that the transition to capitalism
wasn’t
necessarily welcomed by workers and that one might need to do some work
to mitigate
the sense of betrayal. Many workers have taken to the streets in
massive protests. Maybe this is where a bit of democracy (giving workers
some additional "choices") might come in handy as a safety valve.
Building capitalism isn’t quite as
straight-forward
as at first it might have seemed.
One of the reasons for this revolution from above is certainly the
desire of the leadership of the old feudal bureaucracy (Party-state) to
free themselves of the obligation of supporting an expensive structure of
state-controlled firms (some of which turned over far too little surplus
value to be worth the effort and others were in such dire straits as to
require that surplus be turned over to them!). You might want to show the
happy faces of the Party delegates at the recent 16th Party Congress as
they decided to free up some of these pitiful feudal underlords from the
bureaucratic nest and allow them to fail, throwing millions more into the
lower reaches of the capitalist labor market. Ending feudalism can be
fun!
But after showing this “downside” of the transition, you
might
then want to take a more up-beat tone. You could show how the old feudal
labor
allocation system provided workers and firm management with virtually no
labor
allocation choices (the choices being made bureaucratically and then
relatively
fixed) and that the new capitalist labor markets are fundamentally about
choices.
Can you hear the up-beat music? And it is important to note visually
that these
choices are voluntary, in the sense that there is no direct
coercion. Workers
learn to search for jobs, prepare themselves to meet the requirements of
potential
employers, and then go about the process of trying to get
hired. Employers learn
to communicate the availability of jobs and their job requirements, as
well
as to set up processes for filtering through applicants to find the
“right”
ones to meet their needs. This shows your viewers how capitalist labor
markets
are unlike the feudal labor allocation system in that they are
predicated upon
the voluntary employment seeking behavior of the worker (or potential
worker)
and the presence of choice of employers. “If you want to make
capitalism,”
your narrator says, “then you must create
choice.” Capitalism has
its own unique types of drama, then. Will the worker find a job? Will
the managers
at the firm find the sort of employee they need to gain more surplus
value,
to become “competitive?” Perhaps you could end this segment
of the
video with Milton Friedman’s words “free to
choose.”
It is not uncommon for it to be assumed that the flexibility that comes
with
the capitalist labor allocation system (allocation within labor
markets) must
be somehow fundamentally more efficient than the bureaucratic allocation
system
that prevailed under state feudalism. In other words, and in the
specific case
of China, it is assumed, all other things being equal, that this
revolutionary
change in class processes has generated and will continue to generate
more surplus
value for Chinese economic growth and development than would be possible
under
the old system. Here you can segue into visuals of new superhighways,
airports,
and yuppies with cell phones. The narrator could ask: “Would it be
possible
for China to grow so rapidly without capitalist exploitation providing
the necessary
surplus value?”
The evidence in China does seem to support this
assumption
about the relative effectiveness of capitalist exploitation. Indeed,
some of
the most dramatic transformations in economies have occurred with
similar transitions
from feudalism to capitalism, including the Meiji Restoration in Japan
which
was probably most similar to the transformation of China in that it was
orchestrated
by the existing feudal (economic-political) elite. Under the previous
system,
Chinese workers were bound by ties of fealty to the bureaucracy and,
more specifically,
to a particular SRE or commune. The ties of feudal bondage formed the
basis
for the production and appropriation of feudal surplus value, but also
constrained
the size of that surplus value. In particular, the feudal danwei system
dampened
worker motivation (or, at least, this is the standard assumption), such
that
the level of average worker effort was less than under capitalist
exploitation.
Your video can demonstrate this by showing that the hardly working
worker of
the danwei system could be admonished, even punished in certain ways,
but not
terminated, and therefore tended to shirk. The same worker, under
capitalism, can be thrown out of the
SOE.
Perhaps you can visually demonstrate how this acts to motivate the
workers to
greater effort (and, therefore, higher productivity) than the
mostly moral suasion (of "socialism") under the old system.
You could also show all the wonderfully colorful posters that were used
as
part of a general cultural process to motivate workers under the old
system.
This was all part of the rhetoric of socialism. But, alas, the rhetoric
did
not quite work; at least the end results were not satisfactory to the
Chinese
military and the rest of the bureaucracy. It did not result in
sufficient surplus
value to finance “modernization” and to push China closer to
the
West. At the end of the day, the cultural tools of Maoist Marxism
failed, in
part, because workers simply knew better: China’s
“socialism”
left them feeling alienated and exploited. I do not think it would be
difficult to demonstrate this on the Making Capitalism video.
In addition, the feudal obligation of the worker to toil for a single
employer
had a flip side, the obligation of that employer to provide not only
lifetime
employment for the worker but also to provide for the welfare of the
worker
and his/her family, providing health care, education for children,
subsidized
food, housing, and so on. Thus, not only was the production of surplus
value
constrained by the motivational problems associated with the feudal
danwei system,
but the distribution of surplus value was constrained by a heavy
commitment
to fund social services for the feudal work force (“the iron rice
bowl”).
Capitalist labor allocation is understood to have solved the
motivational problems
by eliminating the entire system of feudal obligation, the danwei
system, and
replacing it with a capitalist contingency: employment is always
contingent
on the satisfaction of both parties and can be relatively quickly
terminated
and capitalist obligations are limited to those negotiated in the labor
market.
In order for this new arrangement to work, new social processes were
created
both within the formerly state run enterprises, now formally state owned
enterprises
(SOEs), and within the larger social formation. As an example of this,
the Making Capitalism in China video could show the
xia gang system of
laying off workers (yet keeping them officially on the employment rolls of the
firm).
Cut to a stream of workers leaving the factory grounds. The xia gang system
provides managers with the flexibility to remove redundant workers, yet
by keeping
those workers on the list of employees it creates a hopefulness that the
old
obligation isn’t completely severed and is, therefore, less likely
to
spark severe reactions from workers than outright firing. To further
mitigate the break in the feudal obligations of the firm to take care of
its workers for life, many of the SOEs are providing minimal financial
support to their xia gang unemployed, taking a bite out of the
surplus value generated by workers still employed. This takes away some
of the punch of the unemployment mechanism, reducing the efficiency of the
shift to capitalist labor allocation. Nevertheless, this new way of doing
things is unambiguously
capitalist. It represents precisely the sort of flexibility
in
employment that is a basic feature of the capitalist labor allocation
system.
And over time workers have come to understand that it really is a
breaking of
the old obligations. The video could show a large-scale street
demonstration by xia gang
workers (although you will, no doubt, have to stage this demonstration
since
the Chinese authorities do not typically allow Westerners within close
sight
of these events, much less allow them there with camera equipment in
hand, although if you set up shop in Liaoyang or Shenyang, in
Liaoning Province in the old rust belt of Northeast China, where many
old and very large state run enterprises have not survived the
transition to private capitalism, you
stand a good chance of observing a real demonstration).
At the end of the day, are capitalist labor markets the
best
way to allocate labor power and to motivate labor? In China, as
elsewhere, it
does appear that it is superior to feudal allocation and
obligations. The rather
unique processes of voluntary labor contracting and the flexibility
of capitalist
labor markets seem to serve both as a wonderful motivator (resulting in
higher
levels of surplus value) and as a tool for management to
“rationalize”
production. But despite all sorts of discussion over the years, no clear
understanding
has ever emerged of just why such processes should in the end actually
lead
to the optimal allocation of talent and human energy or to the best path
to
economic growth and development. To say that capitalism is better than
feudalism
is not to say that there are no superior alternatives to both. Some have
tried
arguing that China was trying such an alternative that failed. However,
when
I’ve deployed the concepts of class processes described in these
essays
I have not found any such alternatives to have ever been tried in
China. Instead,
what I find is the same transition from feudalism to capitalism that has
epitomized
a number of other social formations, in particular Great Britain and
Japan.
Now, don’t get me wrong, I think this is a big deal and well worth
a rather
dramatic finish to your Making Capitalism in China for Dummies
video.
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Copyright © 2003 Satya J. Gabriel, Mount Holyoke College. All
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