Process & Development
If we work backwards from today we might get a better idea of exactly where we are within that transition, and of understanding the preceding developments. There appears to be a close resemblance between the events in Russia resulting from Yeltsin's assumption of power, and those in China in 1992, when Deng Xiaoping introduced his economic reforms. The measures introduced by both of restoring and encouraging the market, of large scale privatisation of state-owned property, can be seen as counter-revolutionary actions, similar to those which resulted in the Restoration following the bourgeois revolutions in England and France. Both brought about a qualitative change in economic and social relations compared to what existed prior to the changes. In short they brought about a social counter-revolution from above. This was in many ways playing the film of the initial revolutions in reverse.
Lenin's vision of proletarian social revolution was precisely that. First seize political power via a Political Revolution, then use that political power via the State to transform social relations. Although, in a Stalinised, bureaucratised form, Mao's vision was the same. In Lenin's case the idea was that within this process the working-class – ideally spurred on by its more advanced brothers and sisters in the West – would develop, become more class conscious, and increasingly exercise its own political rule. That is a forlorn hope even with the developed working class in the West, let alone with that in Russia in 1917, just as it was a forlorn hope that the nascent bourgeoisie of the 17th and 18th century could assume that role overnight following such a revolution. In Mao's case that never was the vision. Rather it was that the Communist Party would exercise that role on behalf of the workers and peasants from start to finish, just as in reality it had done in Russia.
Yeltsin and Deng's counter-revolution has attempted to do the same thing in reverse. And yet, Trotsky is right. Counter-revolutions never do fully restore what revolutions have overthrown. In neither China nor Russia is there anything approaching even the kind of “free market” Capitalism of the West. In Russia considerable amounts of property remained in the hands of the State. In recent years, in fact, some state industries such as Gazprom have grown massively, and been used by the State to take-over other large private companies both within Russia and overseas. Gazprom, in particular, is used almost blatantly as an arm of the Russian State's foreign policy. Western businessmen complain incessantly even now, that State officials who grew up as Soviet officials, simply do not understand the basic concepts associated with the principles of the free market or competition.
A similar situation exists in China. Although, the private sector has grown massively in China, the State owned enterprises still account for around 30% of the economy, and probably a larger proportion of employed labour. There is an interesting discussion of the labour market reforms in New Zealand Journal of Asian Studies 3, 2 (December, 2001): 42-72.LABOUR MARKET REFORM IN CHINA’S STATE-OWNED ENTERPRISES: A CASE STUDY OF POST-DENG FUSHUN IN LIAONING PROVINCE Moreover, where many of the smaller SOE's were privatised they were taken over by village communes – for which probably read the People's Liberation Army, which exercises considerable economic power in its own right.
And, economic policy remains centrally planned and directed in China, despite the introduction of large private enterprises, and the market. Lenin argued that it was quite different to have a market economy such as that established under NEP, where that market operated under the conditions dictated by a Workers State to a market economy protected by a Capitalist State. The Chinese State retains massive levers of power over the market, and over the private sector, as its actions following the Financial Crash demonstrated. One right-wing economist comments on this role, and the ability of the State to operate through its control of the banks,
“This malinvestment was made worse by the multiple distortions generated by the intervention of the Chinese state (mainly via fiscal and tariff incentives). As a result, credit was directed to the so called "strategic" sectors for the State: new technologies (electronics and telecommunications), automobile and exporting industries.
Third, the Chinese production structure is all the more unbalanced since the investments of local companies have been mostly financed by the state-owned Chinese banking system, in which credit is allocated according to the aims of an industrial policy and not according to profitability expectations (even in companies belonging to the private sector which represent 45% of the total) [3]. This explains that depending on the source (Morgan Stanley, Moody's, etc.), the share of nonperforming loans is estimated at over 50% of total loans [Pei, Shirai, 2004]. According to Rawski [2001], the share of interest paid on interest owed stood at 84% in 1994, below 60% between 1996 and 1998 and under 50% in 1999. As a result, when they develop an industrial project, companies in China worry less about projected profitability or the competitive environment than about the State policy in favor of regions, fiscal incentives, or access to public credit [Huan &alii, 1999].
Note [3} According to Wangjun [2002], investment decisions, and not only for infrastructures, take into account land use planning, national defence, harmony between ethnic groups, the fight against poverty. . . .Furthermore, in 2002, 79.5% of the financing of economic agents came from the banking system against 16.5% for bonds and 4% for shares (Contemporary Banker, page 10, April 2003).”
Lenin commented that the bourgeoisie establish bourgeois democracy as their form of rule, and having done so are loathe to relinquish it. He did not live long enough to winess Nazi Germany. But, his argument remains valid. The bourgeoisie did not willingly relinquish bourgeois democracy in Germany. They did so because they were not strong enough to continue to exercise political power directly. Bourgeois Democracy is their chosen form of political rule. It is the form best suited under normal conditions to Capital accumulation. Only where the bourgeoisie is not strong enough as an economic and social class in society to rule directly via bourgeois democracy does it cede political power to a Bonapartist State to rule in its stead.
But, in China there is not even the pretence of bourgeois democracy. Political power rests firmly with the Communist Party, which controls all levers of the State, tightly, and exerts economic and social power through it. In Russia, there is a semblance of bourgeois democracy, in that it holds elections, but every impartial commentator realises that these elections are anything but free and fair, that influence is exercised through the State, and its control over the media, and other aspects of social life. It is not the rump Communist Party that exerts this power, but those sections of the former Soviet State like Putin who were connected with the KGB etc.
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