China in Transition

Primary Stage of Socialism or Primitive Capitalism?

Chi Hung KWAN
Consulting Fellow, RIETI

China, while maintaining its socialist cover, is pushing forward with capitalism as symbolized by the permeation of the market mechanism and private ownership. The government positions the current Chinese economy as being in "the primary stage of socialism," but the present situation of polarization between the proletariat and the propertied class is rather more akin to "primitive capitalism."

At the 13th National Party Congress of the Communist Party of China in 1987, then party general secretary Zhao Ziyang put forth the view that China was in the primary stage of socialism. "Socialism in China was born out of a semi-colonial and semi-feudalistic society, and its level of productivity greatly lags behind that of industrialized capitalist nations. Therefore, China must go through an extremely long primary stage so that it can achieve the industrialization and the commercialization, socialization and modernization of production that other countries have secured through capitalistic means." The aim of this view was to modernize the country by introducing capitalist elements into a socialist economy. Furthermore, it was said that the primary stage would last for at least a century. By presenting this theory, socialism was shelved as an ideal to be achieved in the far-off future, while the introduction of capitalist elements into the economy was justified.

Essentially, the ideal of socialism is to realize an egalitarian society through the public ownership of production means. However, when we look at the realities in China, we see that the country is drawing further and further away from this goal, as can be seen in the fact that only one part of the population enjoys the fruits of economic development. Many bureaucrats and senior Communist Party officials take advantage of loopholes in laws, abuse their position and power and use whatever means, be they legal or illegal, to make money, and corruption has become a major social problem. Especially, we see cases where managers of state-owned corporations conspire with the government agencies that have jurisdiction over them to divide up state-owned property cheaply through such means as privatization and going public. In due course, the share of state-owned firms in the industrial sector has fallen sharply, and non-state-owned enterprises, including foreign firms, have become the main form of ownership. People's communes in rural areas and state-owned enterprises in urban areas have lost their traditional livelihood guarantee functions, and many workers have found themselves forced to live only on their wage income. However, on the other hand, we are also seeing the creation of a capitalist class that has become rich through either legal or illegal means.

This situation more resembles primitive capitalism, where we see the forging of the relationship between capital and wage labor that is necessary for the formation of a capitalist society, than the primary stage of socialism. (note 1) In the coastal regions, particularly, the industrialization brought about by the "exploitation" of migrant workers from the inland areas and the housing construction boom made possible through the de facto private ownership and concentration of land (enclosure) is indeed a scene reminiscence of Britain during capitalism's formative years.

As this shows, China is blatantly advertising a wine called socialism while selling a vinegar called capitalism under the pretext of the theory that it is in the primary stage of socialism. In fact, leaders have not presented any vision as to how the country can proceed to a higher stage of socialism. In contrast, in 1993 the three pillars of a socialist economy - "planned economy," "people's commune" and "state-run enterprises" - were deleted from China's Constitution. Furthermore, with President Jiang Zemin's "Three Represents Theory" put forward in February 2000, China is steadily moving further away from socialism, as can be seen in the lifting in 2001 of a ban on capitalists joining the Communist Party. In the end, there can be no doubt that the Chinese economy is not moving toward a higher stage of socialism but toward a higher stage of capitalism. However, the higher tiers of capitalism, unlike the primary stage, require the establishment of rule by law, a democratic form of government, and systems to protect private property rights on one hand and the weak (in the form of social welfare) on the other. Thus the path that lies ahead of China is not necessarily a smooth one.

October 25, 2002
  1. Primitive capitalism is also referred to as the primitive accumulation of capital. Japan experienced this stage during the Meiji Period, when farmers who lost their land made up much of the working class, while businesses with political connections, such as the Mitsui and Mitsubishi Groups, accumulated massive amounts of capital thanks to the protection and assistance of the government.
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October 25, 2002