Developments in Socialist Countries: Draft Ideological Resolution of the Communist Party of India (Marxist)

6.1   In present-day realities, when the international correlation of class forces has moved in favour of imperialism, the existing socialist countries have embarked on a course of economic reforms to meet the challenges posed by international finance capital-led and driven globalization. With liberalization sucking all countries of the world into its vortex, these reforms are based on the integration of their economies with the international market. The manner in which these countries are meeting those challenges, in this period of transition, is an issue that requires serious examination.

6.2   Is this process of reforms resulting in the negation of socialism as measured by the people’s ownership of the means of production and the social appropriation of surplus as against the individual appropriation of it? In all these countries, negative tendencies have surfaced during the reform process like rapid widening of economic inequalities, corruption, nepotism etc. These have not only been noted by the ruling Communist parties themselves but visible efforts are there to tackle, contain and correct them. The main question that arises is: is this process of reforms leading to the emergence of an exploitative capitalist class that develops the potential to lead and succeed in a counter revolution in the future? Or, whether this process of correlation of these forces under current reforms, in today’s world realities, will lead to the consolidation and further strengthening of socialism?

6.3   It needs to be noted that every socialist revolution, based on a concrete analysis of concrete conditions, works out its own approach towards developing rapidly the productive forces in order to establish socialism as a system superior to capitalism. How this can be done is specific to the concrete realities faced by the specific revolutions and class correlations, both domestically and internationally.

China

6.4   To a certain extent, what we find in the post-reform socialist China is a reflection of the theoretical positions taken by Lenin regarding state capitalism during the NEP period. The main question involved is that of increasing the productive forces in a backward economy to a level that can sustain large-scale socialist construction. Lenin, during his time, on the basis of the concrete international and domestic situation, consistently endeavoured to rapidly bridge the gap between backward productive forces and advanced socialist production relations. [24] The course of this Soviet history of socialist construction, however, took place under different historical circumstances. [25]

6.5   In China today, what is being sought is to attain the conformity between the levels of productive forces and the relations of production under socialism. The advanced socialist production relations cannot be sustainable at lower levels of productive forces. A prolonged period of low levels of productive forces would give rise to a major contradiction between the daily expanding material and cultural needs of the people under socialism and backward productive forces. The Chinese Communist Party (CPC) has concluded that if this contradiction remains unresolved, then socialism itself in China would be under threat.

6.6   The General Programme of the CPC characterized its task thus: ‘China is at the primary stage of socialism, and will remain so for a long period of time. This is an historical stage which cannot be skipped in socialist modernisation in China, which is backward economically and culturally. It will last for over a hundred years. In socialist construction we must proceed from our specific conditions and take the path to socialism with Chinese characteristics.’

6.7   The Chinese Communist Party advanced a theoretical conceptualisation of the primary stage of socialism. This in fact, as noted earlier, conforms to what Marx and Engels themselves had stated and what is accepted by all subsequent Marxists: that socialism is the transitory stage between capitalism and communism and hence constitutes the first stage of a communist society. The CPC however has gone a step further to formulate that within this transitory stage, there will be different phases depending on the levels of productive forces at the time of the revolution. This was systematically elucidated in the 13th Congress of the CPC. China, being a backward, semi-feudal, semi-colonial country at the time of the revolution, it was at a phase where the socialist transformation of its economy will have to be conducted from very low levels. It is this process which they call ‘the building of socialism with Chinese characteristics’.

6.8   In order to achieve such a transformation, the CPC put forward another theoretical formulation, that of building a socialist market economy. By now, it is clear that as long as commodity production exists, there would be a need for a market to exchange these commodities.

6.9   What is sought to be created in China is a commodity market economy under the control of the socialist state where public ownership of the means of production will remain the mainstay; by which the CPC means ‘firstly that public capital predominates in total social capital; secondly, the state economy controls the economic lifeline and plays a dominant role in the national economy’. Through this, they seek to prevent the economic polarisation and growing inequalities created by private market economy and ensure the common prosperity of the working people.

6.10   These reforms have certainly produced positive results. The Chinese economy grew at a phenomenal nearly 10 per cent a year for the last three decades, and poverty, measured in money terms, fell more than 80 per cent between 1981 and 2005. Initiating reforms, China had planned to ‘double the GNP of 1980 and ensure peoples’ basic living needs. The second step was to redouble the output of 1980 and achieve initial prosperity by the end of the 20th century’. The goals of these two steps have been met. All these have been possible not because China ‘broke from the Maoist past’ but because it developed on the solid foundations laid by the People’s Republic of China during the first three decades of centralised planning. Now the third step aims to ‘make the per capita GNP reach the level of that of the medium-developed countries by the 100th anniversary of the PRC’, i.e., 2049.

6.11   After 33 years of reform, China’s total economic output reached $5.88 trillion in 2010, which is 16 times that of 1978. Similarly, the share of China’s per capita income comparable to the world average grew from 24.9 per cent in 2005 to 46.8 per cent in 2010. The country’s total import and export volume grew from $20.6 billion worth in 1978 to $2.974 trillion worth in 2010. Utilised foreign direct investment from 1979 to 2010 totalled $1.048 trillion.

6.12   The reform process in China itself underwent various changes during the course of these decades. Though they began in 1978, the fall of the Soviet Union and the end of a socialist countervailing force in the world created the new global situation that we have assessed earlier. Simultaneously there were internal turmoils like the Tiananmen Square developments. These developments led to many a ‘course correction’ in the reform process. [26]

6.13   It is in the 1990s that there was a rapid expansion of the private sector in various spheres and the weakening of public provisioning in health, education and social services in the rural areas. Private sector, by 2005, accounted for 50 per cent of the value added in the industrial sector and employed about double the workers than those employed in the State and collective enterprises. However, latest studies (prepared for US Congressional Committee Reports) have shown that the assets of State Owned Enterprises (SOEs) have grown from the equivalent of 60 per cent of GDP in mid-2003 to 62 per cent of GDP in mid-2010. The sectors which SOEs must or plainly do dominate accounted for 80 per cent of the capitalization of domestic stock exchanges at the end of 2010. Similarly, tax revenue from private domestic firms is less than 15 per cent of the total. Of 42 mainland Chinese companies in the Fortune 500 list of the world’s biggest firms in 2010, all but three were owned by the government. China’s own list of the 500 biggest Chinese companies spans 75 industries. In 29 of these not a single private firm makes the grade and in ten others they play only a minor part. The government-owned enterprises in these 39 state-dominated sectors control 85 per cent of the total assets of all these 500 companies. The average size of SOEs is much bigger than that of non-SOEs, though only accounting for 3.1 per cent of the total enterprise number. In terms of average assets, SOEs are equal to 13.4 times of non-SOEs. The average asset size of industrial SOEs increased from 134 million RMB in 1999 to 923 million in 2008, expanding by 589 per cent in 9 years. Meanwhile, the average assets of non-SOEs only moderately increased from 36 million to 60 million, up by a dwarfed 67 per cent.

6.14   Thus, while the private sector enterprises in industries and services are increasing, it should be also noted that big State-owned enterprises control the strategic sectors. The top 50 State-owned enterprises have been consolidated and they hold the commanding heights of the economy in mining, oil, steel, telecom, banking, energy, railways, ports etc.

6.15   The second phase of the reforms focused on the rural areas and increased the rural-urban divide. It is only after 2006 that the Chinese government has taken steps to abolish agricultural tax, increase the grain price subsidy and increase spending in rural health and education. This shows that State planning and intervention still operates to redress certain imbalances.

6.16   However, new problems and disturbing trends are cropping up as a result of these developments. They are mainly the growing inequalities, unemployment and corruption.

6.17   Inequalities : For the entire country, urban and rural, we notice that by 2002, the average group income of the highest 10 per cent was 22 times higher than that of the lowest 10 per cent. The last 18 years saw an over 13-fold increase in the urban-rural income gap in absolute terms. China has more billionaires today than any other country other than the United States of America. In the ten years from 1997, a period which saw the remarkable economic boom, the share of workers’ wages in national income fell from 53 per cent to 40 per cent of the GDP.

6.18   In an effort to redress some of these imbalances, the Chinese government started the development-oriented poverty reduction programme in the rural areas in an organised and planned way. [27] In line with the increase of economic and social development level and based on the changes in price index, the state gradually raised the national poverty line for rural residents from 865 yuan in 2000 to 1,274 yuan in 2010. Based on this change, the poverty-stricken rural population decreased from 94.22 million at the end of 2000 to 26.88 million at the end of 2010; and their proportion in the total rural population decreased from 10.2 per cent in 2000 to 2.8 per cent in 2010.

6.19   Corruption: Chinese disciplinary and supervisory authorities have investigated 119,000 corruption cases during the first 11 months in 2010, slightly more than 115,000 of the same period last year. Investigations of 108,000 cases of those have been concluded and 113,000 individuals involved have been punished for violating the rules of CPC discipline or administrative discipline, and of them, 4,332 have been shifted to the custody of judicial authorities for violating laws.

6.20   Other Issues : There are other imponderables. One of the changes that has been introduced in 2002 is the decision to admit capitalists into the Party. Today a number of entrepreneurs and businessmen have joined the Party. The ideological and political orientation of the Party can come under new pressures with the changing composition of the Party.

6.21   Another problem is the dropping of the concept of imperialism from the understanding of the Communist Party of China. In the absence of an anti-imperialist direction, there are signs that nationalism is becoming the main sentiment among Chinese youth.

6.22   To sum up: During these three decades of reforms China has made tremendous strides in the development of productive forces and economic growth. A consistent 10 per cent plus growth rate on the average over a period of three decades is unprecedented in the entire history of capitalism for any country. However, this very process has clearly brought to the fore adverse changes in production relations and therefore in social relations in China today.

6.23   How successfully these contradictions are dealt with and how they are resolved will determine the future course in China.

6.24   It is also important to assess the reforms adopted by Vietnam, Cuba and North Korea subsequently. These deal essentially with the manner in which they relate themselves with international finance capital and globalization, particularly when the growth of these socialist countries, earlier based on the decisive support and help from the USSR, is now compelled to be based on their integration with the international market determined by globalisation. The need is to meet the challenges posed by imperialist globalization to the very existence of socialism in these countries.

Vietnam

6.25   At the 6th National Congress of the Communist Party of Vietnam in December 1986, the party’s leadership introduced changes in most aspects of life, particularly in economic policy, under the name of Doi Moi or Renovation.

6.26   The report of the 6th Congress of the Communist Party of Vietnam held in 1986 states, ‘In arranging the economic structure, first of all, the production and investment structure, we often started from the wish to advance quickly, did not take into account the practical conditions and abilities . . .’. It goes on to analyse the need for existence of different forms of property in the period of transition. [28] Subsequently, in its 7th Congress, CPV highlighted many emerging problems and the need to combat trends negative to socialism.

Cuba

6.27   Cuba too is in the midst of a review and reformulation of its economic policies. After the collapse of the Soviet Union and the socialist bloc, Cuba suddenly found itself bereft of the steady stream of supplies that were ensured by the erstwhile USSR. US imperialism continues to strangulate Cuba by imposing the most inhuman economic sanctions in the history of the modern world. In this background, the party adopteda resolution on the Guidelines on the Economic and Social Policy of the Party and the Revolution (January 2011) to update the ‘Cuban economic model andaiming at guaranteeing the continuity and irreversibility of Socialism and economicdevelopment of the country and the improvement of theliving standards of thepeople’.

6.28   Cuba is also trying to rework its policy on wages, pensions, close loss-making state enterprises, eliminate ‘undue free benefits, excessive subsidies’ and the ‘ration card’ gradually. It had planned to free land holdings and give them for cultivation through leases to small landowners, create a market for small producers and encourage production for exports. It was also decided to initiate steps to improve labour productivity, discipline and relocate excess labour force. It also plans to introduce taxation system wherein higher taxes are levied on those attaining higher incomes, provide tax incentives for increasing production and eliminate the dual currency system prevalent in the country [29].

North Korea

6.29   North Korea had adopted in 2011 a 10-Year State Strategy Plan for Economic Development and decided to establish the State General Bureau for Economic Development for monitoring its progress. [30]

6.30   Through such reforms, DPRK seeks to advance its social productive forces, without which it cannot achieve higher levels of economic and social development, so urgently required, to establish the superiority of socialism.

6.31   As we noted in relation to the reform process in China, the main issue that arises from these experiences of reforms in socialist countries is how they handle and tackle the new problems and contradictions that are arising, and this will determine the future course of socialist consolidation.

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