by Harpal Brar
There are many books on the market purporting to give insight into the unfolding economic and political situation in China. Almost all of them are either frankly anti-communist and avowedly pro-capitalist or assert that China’s rise and its economic success are attributable solely to its market reforms. To the extent that the Chinese Communist Party is in control, China is maligned as repressive and coercive, an unfair competitor and, moreover, a new and aggressive power. Many intellectuals and organisations in Europe and the US are engaged in systematically demonising China, and dovetail with the Anglo-imperialist narrative, implicitly or explicitly, that the unfinished business of overthrowing the Communist Party in China is the most urgent and pressing task facing the Chinese people and the ‘international community’.
Having undertaken only recently my own analysis of China, a defence of her revolution and government and analysis of the economic and political trends in the country from its liberation to the present day, my attention was drawn to the above book, as it has been heavily promoted by a coalition of intellectuals with Marxist pretensions claiming to be sympathetic to China and its people. Mr Ross’s book is worse than most of the others in the area. It not only asserts that China’s progress is mostly attributable to market, but goes to the outrageous extent of conflating Marxism and Keynesianism.
By way of my critique of this book, I present the following review for the scrutiny of the reader.
The book’s subtitle is totally misleading as the book has little in common with Marxist theory. As Mr Rees is driven by a visceral hatred of a centrally-planned socialist economy, and is in awe before the wonders of the market, its more appropriate subheading would be ‘In praise of the market economy’.
Every now and then he feels obliged to admit the colossal achievements of the planned economy; that, however, is not the thrust of his book.
He does admit that the scale of China’s social and economic achievement in the pre-reform period were enormous. “… Contrary to certain myths, China’s growth was relatively rapid during periods of expansion of its planned economy from 1949-78”. But, he says, China’s average growth rate between 1949 and the beginning of reform in 1978 was “substantially reduced” by the setbacks caused by the Great Leap Forward, and a smaller one during the cultural revolution. China’s average growth rate from 1950-1978 was 4.9% (p.9), and even enthuses:
“China’s social achievements under Mao Zedong were the greatest in any country in human history. The claims of ‘historical nihilism’ are … fallacious” (p.15).
He goes on to say correctly that in 1947, China’s life expectancy was 35. By 1978, the last year of the pre-reform era, it has shot up to 67. This means that in “pre-reform China life expectancy increased by more than a year for every chronological year that passed – an annual average of 2.3%” (p.17).
Quite right! China’s social achievements did not drop from the sky; they came on the back of, and were inextricably linked with, China’s economic achievements, which were formidable – something which is recognised, even if grudgingly, by even bourgeois scholars possessing a modicum of objectivity.
The average growth rate of the Chinese economy between 1950 and 1978 was far higher than the 4.9% asserted by Mr Ross. It was between 8% and 9% if we take out of consideration the three years of natural disasters (1960, 1961 and 1962). This is confirmed not only by socialists but also by several bourgeois economists – among them Will Hutton and Maurice Meisner.
Mr Ross says: “Other countries can learn from China’s socialist development strategy, which is at variance with the Washington Consensus – a form of neo-liberalism which advocates privatisation and minimalisation of the economic role of the state“.
Nevertheless, Mr Ross’s hatred of centrally-planned economy (which in his wisdom he characterises as an ‘administered’ economy, in the fashion of all bourgeois economists, some of whom call it a ‘command’ economy), his mesmerisation by the wonders of the market, his passion for a mixed economy, run like a red thread throughout his book. In pursuit of this line, he stoops to every conceivable slander against central planning and its architects. With effortless ease, not to say an enormous capacity for falsification, he conflates Marxism with Keynesianism.
Speaking of the post-reform period, he says that China used both the ‘visible’ and the ‘invisible hand’ – not simply the private sector but also the state. According to the plenum of the 18th Central Committee: “We must unswervingly consolidate and develop the public economy, persist in the dominant position of public ownership, give full play to the leading role of the state-owned sector” (p.39).
He asserts “… that the economic structure of the USSR after 1929 in economic terms was not in line with Marx’s conceptions whereas the economic structure of China AFTER 1978 was in line with the conceptions of Marxism” (p.43 – emphasis added).
Citing Deng Xiaoping’s well-known saying that it doesn’t matter whether a cat is black or white provided it catches mice, he goes on to say that as he (John Ross) is “an unashamed Dengist in economic theory, the equivalent of this is that it is perfectly possible to understand China’s socialist economy in terms of either Western or Marxist theory”.
To save himself the trouble of substantiating this absurd assertion, he wisely says that most of his articles don’t quote any economist – they just study the facts (as selected and interpreted by him) – that is, they don’t bother to discuss whether the cat is black or white, “they just focus on catching mice” (p.43).
China’s post-1978 economic policies, he says, clearly “differed from those of the USSR after the introduction of the First Five-Year Plan in 1929, which introduced comprehensive planning and essentially total state ownership, it is clear that China’s economic policies [post-1978] were in line with those indicated by Marx”. He adds for good measure: “whether people wish to formulate Chinese economic policy in Western [i.e., bourgeois] or Marxist terms may be left to them”. To Mr Ross, the important thing is not the colour of the cat but its ability to catch mice.
According to Deng, says Mr Ross, “China was in the socialist and not the (higher) communist stage of development”. For the higher stage to be arrived at, Ross claims, an end has to be put to exploitation of man by man. To the extent he is implying that exploitation is only ended towards the end of the lower stage, this is totally incorrect and has nothing to do with Marxism, for in the lower phase of communism the exploitation of man by man comes to an end in the early days as a result of the society taking over the means of production, thus making exploitation impossible. From then on labour power ceases to be a commodity whereas, according to Mr Ross, labour power continues to be a commodity throughout the lower stage of communism.
China was in the ‘primary stage’ of socialism which was fundamental in defining policy. Socialism itself is the primary stage of communism, and “here in China we are still in the primary stage of socialism. In everything we do we must proceed from this reality, and all planning must be consistent with it” (Deng, 29 August 1987).
“The fundamental characterisations by Deng have been maintained to the present” (p.45).
In this period, said Deng, “we must adhere to the socialist principle which calls for distribution according to the quantity and quality of an individual’s work” (Deng, 28 March 1978).
No one ever said otherwise. So it is an Aunt Sally to bring that up. From this, Mr Ross launches forth:
“In Marxist theory, … economic distribution according to work/labour is the fundamental principle of commodity production…”. This again is a total distortion of Marxism. According to Marx, the value of labour power under the conditions of capitalism is determined the same way as that of any other commodity, namely, by the amount of socially-necessary labour required for its production, which means by the value of the commodities needed to sustain the worker and his family. The worker is not paid under capitalism according to the work he has performed, for if that were the case, there would be nothing left by way of surplus value for the capitalist. Continues Mr Ross: “and a commodity necessarily implies a market. In this socialist period a market would therefore exist – hence the eventual Chinese terminology of a ‘socialist market economy’. As presented by Deng Xiaoping and his successors … such analysis is highly compressed but clearly in line with Marx himself” (p.46). These few lines have no connection with the opening sentence and have been arbitrarily inserted, and the reader is left with the impression that market relations will continue to exist throughout the lower phase of communism and possibly further along the line.
Marx envisaged, says Mr Ross, that the transition from capitalism to communism would be a prolonged one, citing the Communist Manifesto to the effect that “the proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to CENTRALISE ALL INSTRUMENTS OF PRODUCTION [emphasis added] in the hands of the State, i.e., of the proletariat organised as the ruling class; and to increase the total productive forces as rapidly as possible”.
Ross emphasises ‘by degrees’ and attributes to the authors of the Manifesto the idea that Marx and Engels “envisaged a period during which state-owned property and private property would exist”. Therefore, he says, the simultaneous existence of state and private ownership in China is “clearly more in line with Marx’s conceptualisation than Stalin’s introduction ‘all at once’ of essentially 100% state ownership in 1929”. Why 1929? Why not 1924?
Ross then goes on to give a long quotation from Marx’s Critique of the Gotha Programme on the question of payment according to work in the lower state of communism, which no Marxist-Leninist has ever questioned. In fact Stalin fought with might and main against the wage equalisers of the day for which he has been routinely attacked by Trotskyite counter-revolutionaries for creating a privileged elite.
Stalin, following Marx, Engels and Lenin, well understood that during the lower phase of communism only one injustice could be done away with, that is, the exploitation of man by man through the seizure by society of the means of production as private property. The other injustice, that is, of distribution of articles of consumption “according to the amount of work performed” and not according to needs could not be abolished during the lower phase due to the lack of abundance of articles to satisfy everyone’s needs.
Ross, however, in complete disregard of the most basic principles of Marxism, declares with great elation and total thoughtlessness, “post-Deng policies in China were more in line with Marx’s prescriptions than post-1929 policies in the USSR”, that China’s policy of maintaining “large enterprises within the state sector and releasing the small ones to the non-state sector – together with the creation of a new private sector – created an economic structure clearly more in line with that envisaged by Marx than the essentially 100 per cent state ownership in the USSR after 1929” (p.48).
Mr Ross, having first asserted, without even an attempt at substantiation, that “reform and opening up” was “entirely in line with Marx’s concepts”, that it was a return to Marx “after the deviations from Marx which existed in the former USSR”, further makes bold to say that this return to Marx “allowed the further development of Marxism up to the 19th Party Congress” and led to the triumph of Chinese Marxism.
A couple of pages further down the line, Mr Ross says: “To accurately judge the effects of the reform and opening up it is necessary to put it in its historical and international context”. He seems to have got frightened at the prospect of putting ‘reform and opening up’ in its historical context, for he quickly backtracks, saying that “to avoid making this article unnecessarily long, China’s period of development prior to reform and opening up, from 1949-1978, will not be analysed in detail here”.
Conveniently, for him that is, he passes over the most spectacular period of China’s development – a fact which is recognised by all thinking and knowledgeable people. He merely emphasises the “miracle” in the social field, especially the increase in life expectancy by 31 years, “or over a year per chronological year”.
Having pointed out “the extraordinary SOCIAL achievements of China prior to the reform and opening up”, and characterising their denial as ‘historical nihilism’, he cites Xi Jinping on the question of the two periods of China’s post-1949 development:
“The two phases – at once related to and distinct from each other – are pragmatic explorations in building socialism conducted by the Chinese people under the leadership of the Party. Chinese socialism was initiated after the launch of reform and opening up based on more than 20 years of development since the socialist system was established in the 1950s after the People’s Republic of China (PRC) was founded. Although the two historical phases are very different in their guiding thoughts, principles, policies, and practical work, they are by no means separated from or opposed to each other. WE SHOULD NEITHER NEGATE THE PRE-REFORM-AND-OPENING-UP PHASE IN COMPARISON WITH THE POST-REFORM-AND-OPENING-UP PHASE, nor converse” (5 January 2012) (p.540-555 – emphasis added).
There is not a hint in Xi Jinping’s remarks about the pre-reform period, which was characterised by central planning and an emphasis on building heavy industry, especially the machine-building industry – very much along the post-1929 Soviet model, which accounted for the extraordinarily remarkable achievements in the USSR and Eastern Europe and then in China – being a departure from Marxism and the post-reform period in China being a return to Marx.
Thus Mr Ross’s assertion is attributable to a mixture of fevered imagination, deceit, dishonesty and ignorance – wilful or otherwise. However, in making such assertions, he is engaged in discrediting Marxian economics and every Marxist has a duty to refute him at every turn. If he wants to glorify the market, that is his perfect right, but he should not be allowed to get away with negating the epoch-making achievements of socialism through centrally-planned economic development. It is not a question of defending Marx or other luminaries, including Stalin, but defending the future of humanity. For, if the future of humanity lies in the market, Marxism and socialism are not the future of humanity. Marxists may as well consign Marx’s life work – Das Kapital – to the waste paper basket.
China has doubtless made the greatest contribution to the reduction of poverty globally, but to attribute this reduction solely to the post-reform period, as does Mr Ross, is a stark example of ‘historical nihilism’ which he condemns when others practise the same art (see p.69 of his book).
China’s achievements, according to Mr Ross, flow from the reforms period, which marked “… a return to Marx, from the distortions of his ideas which had developed in the USSR and which affected China’s economic policy in the immediate post-1949 period” (p.76).
In a vain attempt to substantiate his assertions, which he usually does by making further assertions, he refers to the quotation from the Communist Manifesto cited above before proceeding to give a long quotation form Marx’s Critique of the Gotha Programme, where Marx explains the two phases of communism – the initial period during which a worker is paid according to his work, and the higher stage in which payment is made according to need.
No Marxist-Leninist, including Ross’s hate figure, Stalin, has ever disputed Marx’s penetrating statement on this question. Ross hates Marxian central planning; consequently, at every turn, in and out of season, he hits out at the very concept, albeit under the pretence of safeguarding Marxian economic theory against alleged Stalinist distortions.
Centralised planned economy was no invention of Stalin’s. It is part and parcel of Marxian economics. Lenin, who knew his Marx inside out, stressing the need for planned development of the socialist economy, with its emphasis on a long-term plan, stated that one of the truly gigantic tasks of the socialist revolution was: “the transformation of the whole state economic mechanism into a single huge machine, into an economic organism that will work in the such a way as to enable hundreds of millions of people to be guided by a single plan” (Political Report of the Central Committee to the Extraordinary Seventh Congress of the RCPB(b), 1918).
Frederick Engels, the co-founder of scientific socialism, put it in the following terms:
“Only conscious organisation of social production, in which production and distribution are carried out in a planned way, can lift mankind above the rest of the animal world as regards the social aspect … Historical evolution makes such an organisation daily more indispensable but also with every day more possible. From it will date a new epoch of history, in which mankind itself, and with mankind, all branches of its activity, and particularly natural science, will experience an advance that will put everything preceding it into the shade” (Introduction to the Dialectics of Nature).
Throughout his book, Ross implies that central planning somehow stands in the way of higher productivity of labour. That is not true. This is what Lenin had to say on the subject:
“In the last analysis, productivity of labour is the most important, the principal thing for the victory of the new system. Capitalism created a productivity of labour unknown under serfdom. Capitalism can be utterly vanquished and will be utterly vanquished by the fact that socialism creates a new and much higher productivity of labour” (‘A great beginning’).
Stalin was only following in the footsteps of Lenin when he said: “Socialism can succeed only on the basis of a high productivity of labour, higher than under capitalism, on the basis of abundance of products and of articles of consumption of all kinds, on the basis of a prosperous and cultured life for all members of society. But if socialism is to achieve this aim … our country must have a productivity of labour which surpasses that of the foremost capitalist countries” (Speech at the First All-Union Conference of Stakhanovites).
It was following this reasoning that Soviet central planning was developed, resulting in spectacular successes of the 5-Year Plans, which successes are recognised universally.
Referring to the post 1929 Soviet economy, Mr Ross even shuns the expression ‘planned economy’, instead calling it an ‘administered economy’, as though there could be any economy that required no administration. His objection to the post-1929 Soviet economy is that the planned economy was introduced too quickly; that there was not “… a prolonged process of transition in which both state and private property would exist” and the “state-owned or dominated system was introduced immediately in an extremely short period of time”.
It is a rehash of the old, and discredited, Menshevik argument as to how long capitalism had to develop following the bourgeois revolution, before the proletariat could progress to the stage of socialist revolution. The truth is that by 1929, the degree of the preparedness of the proletariat, combined with the material conditions required for the advance to a centrally-planned economy were in place. Precisely for this reason, the Soviet Five-Year plans were such unimaginable successes, recognised throughout the world by progressive humanity and even by some objective bourgeois. Let it be said in passing that if centralised planning could only be introduced at the higher stage of communism, as Ross asserts, the higher stage will never be reached, for the preparation for the higher stage takes place in the lower stage where productivity is raised precisely through central planning to make it possible for the higher stage to be reached.
Because the process in the USSR was not marked by a “long transition period” – to satisfy the snivellers of the type of Mr Ross; because the Soviet process saw “the abolition of the market and all forms of private ownership, in a single step – not a process ‘by degrees’ as Marx put it”, it was therefore not in line with Marx’s conception “but an ultra-left adventure” (p.83). One wonders what Marx would have made of such mad and impotent ravings that are reminiscent of condemnations of the October Revolution in Russia by opportunists of every variety as being not in accord with Marx’s conception. Well, life moves on, just as in the adage that the caravan carries on while the dogs bark.
He further asserts that, even if an argument could be made that the centrally-planned economy was necessary to make preparations for the then-impending war against German fascism, this system should not have been continued after the Soviet victory in the Second World War. “Whatever”, he says, “were the geopolitical considerations of the 1930s, the decades long continuation of an administered, essentially entirely state, economy after World War II was not in line with the concepts of Marx …” (p.84).
These pitiable whinings are all that Mr Ross can offer in his attacks on Soviet planning, as indeed of the economic policy pursued in China between 1949-1978, for “…the economic course in China prior to reform and opening up constituted the same ultra-left deviation from Marx’s concepts as had existed in the USSR” (p.84).
Let it be said in passing that the market did not disappear in the Soviet Union, if for no other reason than that there were two sectors of the Soviet economy, i.e., the state sector, in which industry and its produce belonged to the state; and the collective economy in which, although the means of production belonged to the state, the produce belonged to the collective farms. Since the collective farmers at the time were unwilling to have relations with the state on any other terms than the market, the market continued to exist, although the socialist state was looking to ways of reducing, through a system of products exchange, limiting and eventually doing away with the market so as to extend planned production to the entire national economy of the USSR.
Mr Ross continues: “There is a strong positive correlation between openness of an economy to trade and its speed of economic development – this correlation being the international expression of the key role played by domestic division of labour …
“The low level of international trade was an integral part of the Soviet system after 1929, which meant cutting off the USSR from broad participation in the international division of labour – and thus in contraposition to Marx’s concepts.” If indeed there were to be such a strong correlation between openness of an economy to trade and its speed of economic development, as is asserted by Mr Ross, one would be at a loss to explain the spectacular development of the post-1929 centrally-planned economy in which foreign trade played but a very small part. The Soviet Union, quite correctly, did not want its economy to become an appendage of the world capitalist market. However, after the victories of the Red Army in the Second World War, the triumph of revolutions in Eastern Europe and Asia, there was plenty of trade within the socialist community.
Ross continues: “In contrast to Soviet deviation from Marx, support of globalisation is one of the most fundamental features of China’s Marxist economic policy – being incorporated into the very name of ‘reform and opening up’.” (pp. 92-93).
Consequent upon globalisation, says Ross, countries have a common fundamental interest; prosperity of each country depends on other countries. Mutual advantages of international division of labour underpin modern prosperity – of a shared destiny of humanity, recognition of diversity, and equality of countries. (See p.95).
In writing these lines, Mr Ross ‘forgets’ the fundamental characteristic of imperialism which seeks domination. In this world, with imperialism seeking domination, to talk of shared prosperity is to live in Cloud Cuckoo Land. It is not for nothing that imperialist countries put every possible obstacle in the way of Soviet trade, just as they did in the way of PRC trade between 1949 and 1978. To blame the victims of imperialist trade embargoes, one has to be completely bereft of rational reasoning and a sense of justice – or just motivated by anti-communist, imperialist prejudices.
He is so obsessed with globalisation as to assert that “Globalisation [is] indispensable for successful economic development …” (p.122).
According to Ross, the most powerful forces for raising productivity and growth are:
1. Increasing the socialisation of labour;
2. Globalisation, and
3. Capital intensity.
Turning to Keynes, he says:
“… the economic structure Keynes envisaged was not the one in which the state owned all the productive apparatus (i.e., not the post-1929 Soviet model) but it was one in which the extension of the role of the state would allow it to set the overall level of investment which ‘cannot safely be left in private hands’” (p.139).
But such a structure does not exist in the capitalist West, where by definition the level of investment is set by private capital: “… If control of investment were taken out” of the hands of private capital, “it would no longer be a capitalist economy” (ibid.).
“… By this argument”, he continues, “one has arrived at a ‘Chinese’ economic structure – although approaching it via a Keynesian and not a Marxist framework … grasping large state firms and releasing small ones to the non-state/private sector, coupled with abandonment of quantitative planning, means that China’s economy is not being regulated via administrative means but by macro-economic control, including centrally at the level of investment – as Keynes advocated” (p.139).
Keynes advocated a certain ‘sociali-sation’, that is, state control of investment “as the only means of securing an approximation of full employment”.
And this “somewhat comprehensive socialisation of investment” did not mean elimination of private capital, but socialised investment operating together with a private sector involving “all manner of compromises and devices by which public authority will cooperate with private initiative… apart from the necessity of central control to bring about an adjustment between the propensity to consume and the inducement to invest, there is no more need to socialise economic life than there was before … The central controls necessary to ensure full employment will, of course, involve a large extension of the traditional functions of government” (quoted in Ross pp. 138-139).
China, says Ross, has created a structure through reform and opening up which gives it a decisive advantage. In addition to the fiscal and monetary levers, it has, in the words of the Wall Street Journal, a third option, namely, that “The National Development and Reform Commission can accelerate the flow of investment projects” (p.135).
Ross says that the advantage of the Chinese structure can be seen through the example of early 2016 when China’s economy was considered to be slowing down “too much”. It was also a year of very weak growth in the European and US economies. China launched a state investment programme, with an increase in state investment to the tune of 23.7%. “This helped ensure adequate economic growth” and, into the bargain helped to stimulate private investment” (p.140).
Although this “economic structure created by reform and opening up expresses ‘socialism with Chinese characteristics, it also approximated to the structure envisaged by Keynes. In such a structure, China does not administer its economy – the market plays a decisive role in allocating resources” (p.140). Through such a system, says Mr Ross, China can deploy the state “to avoid the severe shortfall in investment … it can also cut back investment in order to avoid overheating”.
He goes on to ask: Why does the West not use the same tools to make up any shortfall in investment? The reason, he answers, is “political”, resultant from the fact that the Western economies are capitalist, not socialist; and that the “economic structure envisaged by Keynes, or the one which exists in socialism with Chinese characteristics, is not acceptable to the Western capitalist class” (p.140); and that a large state sector “creates far more control by society than does a purely private economic structure” (p.140).
Although, he says the means for overcoming the ‘mediocre’ performance of Western economies are “intellectually clear”, the Western capitalist economies are not prepared to implement them (p.141).
In other words, Keynesianism offers a way out of capitalist crisis while maintaining intact the capitalist system of production – a miracle which neither Marx nor Engels, let alone Lenin and his most faithful pupil Stalin, lacked the foresight to envisage. Poor Marx! Poor Engels!
By contrast, China’s ‘socialist market economy’, with its anti-crisis measures, is “far closer to Keynes than any capitalist economy.
“Ironically”, he says, “… although Keynes explicitly wished to save capitalism, it turned out that Western capitalism could not use the tools he suggested” but China’s ‘socialism with Chinese characteristics’ could. In other words, capitalist crises of overproduction, which have been making their devastating visitations since the 1820s with monotonous regularity, are a matter of policy and not the inevitable consequence of the workings of the capitalist system of production. According to this, the capitalist class must be full of mad people who enjoy the spectacle of crises of overproduction, with all their fearful consequences, when they could just conjure them away by taking a policy decision.
Even Mr Ross must know that capitalist production is for profit; no production takes place under this system unless some capitalist can make a profit. As Engels pointed out a long while ago: “… In capitalistic society, the means of production can only function when they have undergone a preliminary transformation into capital, into the means of exploiting human labour power. The necessity of this transformation into capital of the means of production and subsistence stands like a ghost between these and the workers. It alone prevents the coming together of the material and personal levers of production; it alone forbids the means of production to function, the workers to work and live. On the one hand, therefore, the capitalistic mode of production stands convicted of its own incapacity to further direct these productive forces. On the other hand, these productive forces themselves, with increasing energy, press forward to the removal of the existing contradiction, to the abolition of their quality as capital, to the PRACTICAL RECOGNITION OF THEIR CHARACTER AS SOCIAL PRODUCTIVE FORCES” (Anti-Dühring, p.383, emphasis in the original).
Capitalism, doubtless, can expand production exponentially. However, the barrier to this expansion lies in the capacity of the masses to purchase the goods produced. And this purchasing power is relatively reduced with the development of capitalism. Matters are different with an economy based on socialist planned production because it produces not for profit but for “… securing of the maximum satisfaction of the constantly rising material and cultural requirements of the whole of society through the continuous expansion and perfection of socialist production on the basis of higher techniques” (Stalin, Economic Problems of Socialism, p.41).
Ross, however, is of the opinion that, following Keynes, the problem of under-investment and unemployment can be solved inside a market economy, and that is what he says Deng Xiaoping and Chen Yun did. He adds: “Deng Xiaoping and Chen Yun could not fit in the framework of Keynes, but Keynes could fit rather neatly when required within the framework of Deng and Chen Yun” (p.141).
Mr Ross is obviously desirous of paying a compliment to Deng Xiaoping, little realising that equating Deng and Keynes by presenting their economic thinking as identical, he is actually damning Deng Xiaoping as an unremitting capitalist roader, a Keynesian and a saviour of capitalism. Let those who are lauding Mr Ross’s book to the skies as a great breakthrough in Marxian economic theory ponder over these facts and decide for themselves whether Keynes was a Dengist or Deng a Keynesian. Either way it is not a pretty picture.
So as to leave nobody in any doubt on this score, Mr Ross says that Deng Xiaoping famously said that on his death he was “going to meet Marx”. “But Deng may also be having an intense talk with John Maynard Keynes”.
Mr Ross is in the business of advocating a market economy and condemning a planned socialist economy, be it in the former Soviet Union or in China from the time of her liberation to 1978. And he has the temerity to call for the development of a market economy as being “in line with Marx’s analysis”. He would not be able to tell us which Marx, where and when, propagated the idea of a market economy being in line with his analysis. Far from it. Up to now, every Marxist, and every sworn enemy of Marxism, has correctly maintained that it is the job of socialism to put an end to the market through the development of a centrally-planned economy. Precisely for that reason, capitalists and their theoretical representatives, the bourgeois economists, have condemned Marxism and Marxian economics. Anyone interested in further details on this question is referred to my book Perestroika – the complete collapse of revisionism in which I show that the Soviet Union collapsed as a result of the encroachment of the market which undermined the Soviet economy.
Notwithstanding his visceral hatred, and condemnation, of a centrally-planned economy, Mr Ross is, despite himself and in opposition to himself, obliged to admit that in the aftermath of its liberation the PRC embarked on building an economy “fundamental elements of which were drawn from the experience of the Soviet Union”. And there was “nothing irrational in this at all – the USSR, up to that time, had the world’s most rapidly growing economy”; that her post-1929 successes were “extraordinary”; that her GDP growth was “by far the fastest ever achieved by a major economy”; that despite her horrendous losses and destruction during the Second World War, by 1949 she had “already gained” her pre-war production level. If the centrally-planned economy is such a curse as Mr Ross makes it out to be, how does he explain the extraordinary successes of the Soviet Union during the three decades from 1929 onwards? He does not explain; he tries to wriggle out of his self-created unenviable position by repeating for the nth time the absurd assertion that the post-1929 Soviet policy and practice were “radically at variance with that of Marx – to which the USSR claimed verbal adherence” (p.149).
It is difficult to argue with the likes of Ross, who are theoretically bankrupt, dishonest falsifiers of Marxism and historical truth (while claiming to seek truth from facts), and purveyors of bourgeois ideology and corruption among the working class.
His modus operandi can be gauged from the following:
On page 214 of his book he asserts: “Stated in Marxist terms, China’s policy started [he does not indicate when] with a critique of Soviet economic policy. This stated that Soviet economic policy from … 1929, … and afterwards, had made the error of confusing the ‘advanced’ stage of socialism, in which production is not market regulated, with the ‘primary’ developing stage of socialism during which transition from capitalism to an advanced socialist economy takes place. Such a transition should be conceived of as extending over many decades. The final formulation arrived at was that China’s was a ‘socialist market economy with Chinese characteristics’.”
For good measure, he adds that “this debate was framed in Chinese terms, without primary reference to previous economic theory in other countries. The approach … was to ‘seek truth from facts’. The discussion, in fact, dealt with themes analysed not only in Western economies but in debates which took place in the USSR – which [and here comes the mother of all his lies] Stalin ‘resolved’ by killing the economists who disagreed with him” (p.214).
The conclusion of this analysis meant “abandonment of an administratively-planned economy … and the substitution of a market economy in which the state would control certain macro-economic parameters – in particular in regard to investment, keeping large firms in state hands and releasing smaller ones to the non-state private sector”.
Mr Ross does not even attempt to delineate the alleged Chinese critique of Soviet economic policy, nor the alleged Soviet error of confusing the ‘advanced’ stage of socialism with the transitional stage from capitalism to such an “advanced socialist economy”. Marxists have hitherto quite correctly called the transitional stage the lower stage of communism and the advanced stage the higher stage of communism. There is not a iota of proof that the Soviet Union was guilty of this alleged error, unless Mr Ross has his own definition of what is the ‘advanced’ and what is the ‘primary’ stage of socialism. But since he settles all important questions by disregarding all previous economic theory, except when it selectively suits him, it is difficult to pin him down. And this he has the audacity to attribute to his desire to “seek truth from facts”! If he were really seeking truth from facts, he would not dismiss previous debates on matters of political economy so out of hand under shoddy excuses.
Once a Trot always a Trot. As a lifelong Trotskyist, he found it impossible to resist the temptation of baselessly, not to say shamelessly, accusing Stalin of killing the economists who disagreed with him. No, Stalin did not kill the economists who disagreed with him; he made trenchant scientific criticism of them and defeated them through the power of his Marxist-Leninist reasoning. Anyone who wants to be convinced of that should read his Selected Works, in particular his last brilliant pamphlet, The economic problems of socialism in the USSR. That short pamphlet, while written against revisionist contemporaries of his, would equally serve to refute all the lies uttered above by Mr Ross.
Keynes did not mean to abolish capitalism – “a break in the general traditions of society” in his euphemistic language – just to introduce “a large extension of the traditional functions of government”.
This argument, says Mr Ross, led to the “Chinese” structure – “although approaching it via a Keynesian and not a Marxist framework“. Coupled with the formula of grasping large state enterprises and letting go of the small ones to the private sector, along with jettisoning “quantitative planning means that China’s economy is not being regulated via administrative means but by general macro-economic control of investment – as Keynes advocated” (p.222).
Citing Deng Xiaoping’s statement that “it does not matter whether a cat is black or white provided it catches mice”, Mr Ross makes so bold as to say that the cat theory can equally be applied to economics, for “…it doesn’t matter whether something is described in Marxist or western economic terms provided the same economic structure and policies exist. Zhuadda Fang Xiao [grasping large state firms and releasing small ones to the private sector] is a conclusion that may be arrived at from either a Marxist or a Keynesian framework” (p.223).
With this conclusion, Mr Ross obliterates all distinction between Marxian and Keynesian economics, although the two are as different as chalk is from cheese. Anyone with the slightest knowledge of Marxism would know that.
The October Revolution had shattered the faith of the working class in capitalism and put socialism on the agenda, especially as the world was soon to be engulfed by the Great Depression which smashed the optimism of the old bourgeois doctrines which had taught that the free play of the market would produce the maximum of social wellbeing. At this moment, Keynes stepped in, not to destroy bourgeois theory but to save what could be saved from the wreckage.
Keynesian theory claimed to cure unemployment while keeping capitalism intact. It brought comfort in the hour of capitalist despair to an assorted coterie of persons ranging from the fascists of Nazi Germany to the Fabian socialists of Britain. This theory has a special attraction for the petty-bourgeois who are distinguished “by their aversion to class struggle”. Hence its appeal to social democrats who found in it a means, so they believed, of getting most of the benefits of socialism without facing the harsh and demanding conditions of class struggle. Keynes’ theory is readily embraced by people who are viscerally anti-Marxist. Hatred of the bourgeoisie towards Marxism is to be expected for “… there can be no ‘impartial’ social science in a society based on class struggle”, for “all official and liberal science defends wage slavery, whereas Marxism has declared a relentless war on wage slavery …” (Lenin, ‘The Three Sources and Three Component Parts of Marxism’).
Until the grip of capitalist theory on the working-class movement is broken, the road to socialism is barred. It is in this context that the working class has a duty to fight against Keynesianism.
As against his bourgeois predecessors in the field of economics, Keynes argued that the capitalist system, if left to itself, does not necessarily lead to full employment; that appropriate action by the government and central banks could ensure that output and employment was maintained at a high level without getting rid of capitalism.
Keynes hated Marxism and spoke of Marx’s Capital as “an obsolete economic textbook”, “scientifically erroneous and without interest or application for the modern world” (‘Essays in persuasion’).
The essence of his standpoint was that bourgeois ideologists have to be anti Laissez-faire while remaining pro-capitalist and anti-Marxist. His theory differs from the preceding capitalist theory in that it rejects the doctrine that capitalism should be left free from all government interference to be regulated only by the unfettered play of supply and demand.
As if to leave no one in doubt as to his class affiliations, Keynes said: “… A class war will find me on the side of the educated bourgeoisie” (‘Essays in persuasion’).
His proposals, he wrote, are “the only practicable means of avoiding the destruction of the existing economic forms [i.e., capitalism] in their entirety” (‘General theory’, p.380).
Thus, capitalist production for profit is a central feature of the Keynesian system. According to him, there is no necessary connection between production for profit and the economic crises of capitalism.
According to Marx, however, economic crises are inseparably bound up with the profit system; they result from the contradiction between the social character of production on the one hand and capitalist appropriation on the other.
According to Keynes, while the capitalist crisis can be got rid of while keeping capitalism intact by enlargement of the functions of government with the object of “adjusting to one another the propensity to consume and the inducement to invest” (ibid., p.380).
According to Marx, however, “the real barrier of capitalist production is capital itself”, in other words, there is no way of getting rid of capitalist crisis as long as capitalism exists.
Keynes argues that socialisation of investment would do the trick of getting rid of the crisis. However, to retain private ownership of the means of production and yet take away from the capitalists the right to decide how and when to accumulate and invest, is clearly Utopian.
If from Keynesian economics society can achieve the same results as from pursuing Marxian economics, there is hardly any need for proletarian revolution, which alone, as theoretical reasoning and historical experience demonstrate, can lay the ground for wresting from the bourgeoisie the means of production, end exploitation of man by man, and make way for organising production for the benefit of the masses through central planning.
If the bourgeois state were to play a greater role in investment then, according to Ross, that would be the end of crises and unemployment, characteristic of the capitalist system of production, and with it the obliteration of the deep chasm dividing Marxian economics from Keynes’ economic thinking. If only the bourgeois state would heed to this advice! The irony is, he says, “Keynes explicitly put forward his theories to save capitalism.
“But the structure of capitalism has made it impossible to implement Keynes’ policies even when confronted with the most severe recession since the Great Depression”. Wanting to praise China, he asserts that the “anti-crisis measures of China’s ‘socialist market economy’ are far closer to those Keynes foresaw than any capitalist economy”. That, he says, explains the relative success of China’s economy.
Mr Ross should know that Keynesian measures, including state investment, were tried during the Great Depression, especially by the Roosevelt administration, which only came to an end ten years after the war. This came at the end of an imperialist war which claimed the lives of 50 million human beings and resulted in colossal destruction of society’s wealth, paving the way for the brief period of the golden age of capitalism.
The same measures were put into effect in western Europe following the war. Again they failed by the end of the 1960s and had to be jettisoned because of the inflationary effect they produced. The only economies to emerge victorious were the socialist economies of the USSR, eastern Europeans and the Asian socialist economies.
Mr Ross says that both the Great Depression of the 1930s and the Great Recession following the 2007 crash were caused by the collapse in fixed investment in the US and other major capitalist economies. It doesn’t occur to him to ask the question: what caused the collapse? Surely not the whim of the capitalist class. Capitalists invest to make a profit; if no profit can be secured they will not invest. That is precisely what happens during the recurring capitalist crises of overproduction. That is what happened during the Great Depression. Capitalism by its very nature is unable to rid itself of the crises of overproduction, as private ownership of the means of production, production for profit and anarchy of production stand in the way of its solution.
Mr Ross propagates the market economy, without, however, its ‘defects’. His rigmarole reminds us of the following observation of Engels apropos Dühring’s imaginary commune:
“Herr Dühring converts the basic law of existing society into the basic law of his imaginary society. He wants existing society but without its abuses. In this he occupies the same position as Proudhon. Like him, he wants to abolish the abuses which have arisen out of the development of commodity production, by giving effect against them to the basic law of commodity production, precisely the law to whose operation these abuses are due. Like him, he wants to abolish the real consequences of the law of value by means of fantastic ones” (Engels, Anti-Dühring, p.434).
Ever since the October Revolution, bourgeois economists have asserted that Marxism, with its planned economy, is bound to fail because, according to them, without an efficiently functioning market there can be no economic calculation. Further, they argue that, since the aim of socialism is to abolish the market, this cannot but result in incurable inefficiency and bureaucracy, all of which are bound to create an almighty crisis which can only be resolved through the reassertion of the market. This argument amounts to saying that the capitalist mode of production, far from being a historically-conditioned, transitional, phase in the development of human society, is the final destination of humanity – the end of history. The truth is just the opposite, as has been demonstrated by the spectacular achievements of the centrally-planned economies in the Soviet Union, Eastern Europe and the People’s Republic of China between 1949-78. Equally, it has been demonstrated by the tragic event of the collapse of the USSR following three decades of departure from Marxian economic science. The collapse of the Soviet Union was not caused by central planning but the encroachments of the market.
“The chief endeavour of the bourgeoisie of all countries and its reformist hangers-on”, said Stalin, “is to kill in the working class faith in its own strength, faith in the possibility and inevitability of its victory, and thus to perpetuate capitalist slavery”.
In the relentless struggle of imperialism against socialism, in its attempts to undermine the faith of the working class in the inevitability of its victory, the bourgeois economic theories have played a significant role. These bourgeois economic theories, especially of the Keynesian variety, have been waging a ceaseless battle for the allegiance of the working class. And, on the outcome of this battle, rests the future of humanity, whether it is to be one of reaction, destitution, exploitation, oppression, war and untold destruction, or one of growth, prosperity, culture, fraternal harmony, cultural development and peace. In this battle, no class conscious worker can be neutral; he is duty-bound to take up cudgels against bourgeois theory and fight for the victory of Marxism. It is precisely for this reason that I have written this critique of Mr Ross’s book as part of the fight against all poisonous bourgeois doctrines.