China’s State Capitalism Stronger than our Private Capitalism

Or:  China’s “State Socialism” Stronger than our “Corporate Socialism”

After his good explanation (shared here two weekends ago) of how a socialism-inspired economy – best described as state capitalism – boosted the Soviet Union so incredibly well prior to its political collapse (yes: political, not economical!), Richard Wolff moved on to describe China’s route in another video. Unfortunately, this report is below his usually very high standard of deep insight and good explanation, which is why I share this episode reluctantly and only with a longish commentary. 

First thing to add: After the USSR’s political collapse came its economic collapse, not caused by any form of socialism or communism but by the switch from its socialist-flavored and therefore better sharing state-capitalism to utterly greed-driven private capitalism when high-power government officials turned themselves into the new class of capitalist oligarchs by gifting themselves with the major resources and businesses of their countries and then running the usual roughshod of private capitalism over the rest of their people in a virtual economic storm. Just like our own oligarchs, they had no regard for the dire consequences suffered by the rest of the people, much like what happened during the European colonization of native America and what is currently happening in today’s America after our government and major parties have become totally bought by the rich.

The main point to make in this video really would be that private capitalism leads to a lot of competition which – unlike the propagandist narrative we keep getting told – results not so much in individual persons and companies becoming the best they can be, but much more so in a weakening of the whole economy and society constantly suffering from incessant in-fighting that to a huge extent neutralizes every person’s, company’s, and institution’s strengths and efforts.

After its revolution, the Soviet Union went from being a tsarist collection of poor, under-developed, medieval-style feudal, and almost exclusively rural countries to being the second industrial and military superpower in just a few decades, despite being under a constant siege and cold war from the western nations that had acquired a huge head start in industrialization and build-up of its war machines over the course of centuries before the Soviet Revolution. The Soviet Union even suffered two disastrous military invasions from the west. Yet, despite it all, it grew to the second superpower in an incredible record time.

I can explain this only one way. Namely, it managed to grow that fast because, with a central government running the show, instead of competing capitalists, it could avoid much of that neutralizing competition we are still suffering today in our rigged system of private capitalism.

Eventually the USSR collapsed politically because it spent so much on its military (lowering the material quality of life for its population), because it avoided democracy (causing unrest), and because a large portion of the population didn’t understand the big picture (just like here in the U.S.), falling instead for the western propaganda of how heavenly western life allegedly was. Then, once it politically collapsed and fell victim to private capitalism, it transitioned into an economic collapse.

As Richard Wolff points out, the Chinese rulers learned from that disaster, allowing foreign investments and technologies to enter in a more government-controlled way by permitting a limited amount of private capitalism while still holding on to the overall control of the economy. By the Chinese government keeping hold of the reins, another phenomenal economic growth resulted much like previously in the Soviet Union. And by not having to rise up to the rank of the second military superpower matching America’s military empire – because its economic deals were made with the American oligarchy – the Chinese government could share enough of the growing wealth and prosperity with enough of its people to avoid major unrest and even avoid a sufficiently strong people’s push for democracy, which is alien to Asian cultures anyway. Thus no political collapse occurred in China. (I wonder if it might occur in the future, though, because of the abandonment of the rural population, the growing inequality, and a lack of healthcare for so many Chinese — all slaps in the face of an allegedly communist country, since these issues are in utter contradiction to the communist concept of “each according to their needs”.)

The main difference from our own country is that, here in the U.S., the government has become subservient to the ultra-rich and their corporations. Rather than controlling them, our government gifts them with a kind of “corporate socialism” (giving them huge subsidies and tax breaks at the people’s expense) while cutting public spending and letting the big corporations rake the rest of us with private capitalism increasingly unfettered and cruel year after year.

(Note: If the video linked above gets deleted, you may search the Internet for Democracy At Work and the title: “Economic Update: China’s Economic Record and Strategy”)

 

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