The PRC has what is called a Socialist Market Economy. In short, public ownership is the principal, ie dominant and rising, aspect of the economy, hence socialism, while there exists marketization and competition for small and competitive industries, hence market. The theoretical basis of this economy is in classical Marxism, which views private property and markets as progressive with respect to underdeveloped, disparate, disconnected production, and planned production as progressive once markets have centralized, as the path forward once large industry is constructed.
The scientific basis of Marxist socialism is in the understanding that markets centralize over time, stitching together the entire national and then international economy. Markets turn disconnected production of towns into connected production with huge logistical chains and mass industry. Central planning is best accomplished with this already developed industry, where competition dies out and markets become less efficient, while central planning becomes not only more efficient, but required for further economic growth.
The PRC is a developing country. Large swathes of land and production is still underdeveloped, while huge state owned enterprises dominate the economy, with the working class at the driver’s seat via the CPC. This process of gradually folding private property into the public sector as it grows is called the “birdcage model,” and is how China keeps capitalists and private property in check. It’s also why they do not have a fully collectivized economy yet. See the diagram by Chinese economist Cheng Enfu’s diagram on stages of socialism:
The reason China has this socialist economy to begin with is because the working classes successfully revolted and overthrew the landlords and capitalists. It wasn’t due to culture, it was due to necessity. Therefore, when we map to the west, we need to understand the difference in class character, as well as levels of development.
The west is a dying imperialist power, where super profits of exploiting the global south are declining. The west is also largely de-industrialized. A pivot to socialism will probably require strong state planning for re-industrialization, and so will have a different construction process with similar frames of analysis.
Thanks for the thorough reply! I think it shifted a bit from answering how China coordinates industrial development into defending why China has its current political-economic system. This is appreciated context, but I’m not sure it helps me understand the answer to my question wholly.
My question is narrower: which mechanisms behind China’s manufacturing and innovation (state-owned banks, industrial policy, procurement, local government competition, subsidies, etc.) are actually necessary, and which of those could realistically exist within a liberal democratic system?
The west is a dying imperialist power, where super profits of exploiting the global south are declining. The west is also largely de-industrialized.
When I say west, I really mean democratic governance with capitalistic economics — would that be modern liberalism? I don’t believe liberalism is dying, but I do think the western stranglehold on global economics (I.e., imperialistic capitalism) is failing in its later stages. I also think something like democratic socialism could come as a natural result, having come from a democratic capitalist society.
My thing is, though, China saved itself using tactics that I’m not really sure are compatible with modern liberal ideology. Probably not even compatible with democratic socialism. What do you think?
The context was necessary because it stands in stark contrast to western capitalism. To shift to your narrowed question:
My question is narrower: which mechanisms behind China’s manufacturing and innovation (state-owned banks, industrial policy, procurement, local government competition, subsidies, etc.) are actually necessary, and which of those could realistically exist within a liberal democratic system?
All of China’s advancements and structures work precisely because they have a socialist economy, democratically run by the working classes. A liberal, capitalist economy could make use of some of these aspects, however they would ultimately fall victim to the very fact that private ownership is the principal aspect of western economies, with capitalists controlling the state. Therefore these would not be used for pro-social ends, but instead for profit. That’s why I centered the importance of socialism in my explanation. It’s a cohesive system, not parts to cut out and Frankenstein together.
I think the bigger picture here is that you frame western society as democratic, and China as not. I see it in the opposite manner, because a small class of individuals handles the running and gains the benefits of the majority in the west, it cannot be truly seen as democratic. In China, however, it’s the broad majority that controls society and directs the social surplus, that proposes policy and runs the country. China’s form of democracy is structured in a manner that suits China’s characteristics as a socialist country, and therefore liberal democracy as you imagine it wouldn’t really work, as its designed to protect capitalists.
The form of democracy and the mode of production in China ensures that there is a connection between the people and the state. Policies like the mass line are in place to ensure this direct connection remains. This is why over 90% of the Chinese population supports the government, and why they have such strong perceptions around democracy:
The Chinese political system is based on whole-process people’s democracy, a form of consultative democracy. The local government is directly elected, and then these governments elect people to higher rungs, meaning any candidate at the top level must have worked their way up from the bottom and directly proved themselves. Combining this consultative, ground-up democracy with top-down economic planning is the key to China’s success.
I highly recommend Roland Boer’s Socialism in Power: On the History and Theory of Socialist Governance. Socialist democracy has been imperfect, but has gone through a number of changes and adaptations over the years as we’ve learned more from testing theory to practice. Boer goes over the history behind socialist democracy in this textbook.
Further, capitalist society cannot smoothly transition in a reformist manner to socialism. This circles back to capitalist control of the state, it would be like depending on your boss giving you control of the company willingly, but at mass scale. This is why socialism has only really been established via revolution.
The PRC has what is called a Socialist Market Economy. In short, public ownership is the principal, ie dominant and rising, aspect of the economy, hence socialism, while there exists marketization and competition for small and competitive industries, hence market. The theoretical basis of this economy is in classical Marxism, which views private property and markets as progressive with respect to underdeveloped, disparate, disconnected production, and planned production as progressive once markets have centralized, as the path forward once large industry is constructed.
The scientific basis of Marxist socialism is in the understanding that markets centralize over time, stitching together the entire national and then international economy. Markets turn disconnected production of towns into connected production with huge logistical chains and mass industry. Central planning is best accomplished with this already developed industry, where competition dies out and markets become less efficient, while central planning becomes not only more efficient, but required for further economic growth.
The PRC is a developing country. Large swathes of land and production is still underdeveloped, while huge state owned enterprises dominate the economy, with the working class at the driver’s seat via the CPC. This process of gradually folding private property into the public sector as it grows is called the “birdcage model,” and is how China keeps capitalists and private property in check. It’s also why they do not have a fully collectivized economy yet. See the diagram by Chinese economist Cheng Enfu’s diagram on stages of socialism:
The reason China has this socialist economy to begin with is because the working classes successfully revolted and overthrew the landlords and capitalists. It wasn’t due to culture, it was due to necessity. Therefore, when we map to the west, we need to understand the difference in class character, as well as levels of development.
The west is a dying imperialist power, where super profits of exploiting the global south are declining. The west is also largely de-industrialized. A pivot to socialism will probably require strong state planning for re-industrialization, and so will have a different construction process with similar frames of analysis.
Thanks for the thorough reply! I think it shifted a bit from answering how China coordinates industrial development into defending why China has its current political-economic system. This is appreciated context, but I’m not sure it helps me understand the answer to my question wholly.
My question is narrower: which mechanisms behind China’s manufacturing and innovation (state-owned banks, industrial policy, procurement, local government competition, subsidies, etc.) are actually necessary, and which of those could realistically exist within a liberal democratic system?
When I say west, I really mean democratic governance with capitalistic economics — would that be modern liberalism? I don’t believe liberalism is dying, but I do think the western stranglehold on global economics (I.e., imperialistic capitalism) is failing in its later stages. I also think something like democratic socialism could come as a natural result, having come from a democratic capitalist society.
My thing is, though, China saved itself using tactics that I’m not really sure are compatible with modern liberal ideology. Probably not even compatible with democratic socialism. What do you think?
The context was necessary because it stands in stark contrast to western capitalism. To shift to your narrowed question:
All of China’s advancements and structures work precisely because they have a socialist economy, democratically run by the working classes. A liberal, capitalist economy could make use of some of these aspects, however they would ultimately fall victim to the very fact that private ownership is the principal aspect of western economies, with capitalists controlling the state. Therefore these would not be used for pro-social ends, but instead for profit. That’s why I centered the importance of socialism in my explanation. It’s a cohesive system, not parts to cut out and Frankenstein together.
I think the bigger picture here is that you frame western society as democratic, and China as not. I see it in the opposite manner, because a small class of individuals handles the running and gains the benefits of the majority in the west, it cannot be truly seen as democratic. In China, however, it’s the broad majority that controls society and directs the social surplus, that proposes policy and runs the country. China’s form of democracy is structured in a manner that suits China’s characteristics as a socialist country, and therefore liberal democracy as you imagine it wouldn’t really work, as its designed to protect capitalists.
The form of democracy and the mode of production in China ensures that there is a connection between the people and the state. Policies like the mass line are in place to ensure this direct connection remains. This is why over 90% of the Chinese population supports the government, and why they have such strong perceptions around democracy:
The Chinese political system is based on whole-process people’s democracy, a form of consultative democracy. The local government is directly elected, and then these governments elect people to higher rungs, meaning any candidate at the top level must have worked their way up from the bottom and directly proved themselves. Combining this consultative, ground-up democracy with top-down economic planning is the key to China’s success.
I highly recommend Roland Boer’s Socialism in Power: On the History and Theory of Socialist Governance. Socialist democracy has been imperfect, but has gone through a number of changes and adaptations over the years as we’ve learned more from testing theory to practice. Boer goes over the history behind socialist democracy in this textbook.
Further, capitalist society cannot smoothly transition in a reformist manner to socialism. This circles back to capitalist control of the state, it would be like depending on your boss giving you control of the company willingly, but at mass scale. This is why socialism has only really been established via revolution.
I hope that makes sense!