Mao’s “native capitalism”

Capitalism and socialism are inextricably intertwined. We are evolving towards a world where the two systems converge, incrementally and indigenously.

The IJ, Amsterdam

On his marvelous Here Comes China Substack,

Godfree Roberts

has been publishing some fascinating posts on Mao Zedong. In a recent piece, he focused on Mao’s exceptional skills as a military strategist and tactician, but towards the end Godfree touched on economic policy:

Convinced that China needed foreign investment, Mao sent President Roosevelt a plea he repeated to Truman and Eisenhower, “China must industrialize, which can only be accomplished by free enterprise. Chinese and American interests fit together, economically and politically. America need not fear that we will not be co-operative. We cannot risk any conflict”. 

When they ignored him, he was philosophical^, “Some people refuse to understand why we do not fear capitalism, but, on the contrary, develop it as much as possible. Our answer is simple: we have to replace foreign imperialist and native feudalist oppression with capitalist development because that is the inevitable course of our economy, and because both the capitalist class and the proletariat benefit. What we don’t need is not native capitalism, but foreign imperialism and native feudalism”.

Commander Mao

Here in the West, we tend to take a very binary view of these things: you have either socialism or capitalism. If a society allows private enterprise, it is obviously capitalist, or so the conventional thinking goes. Mao clearly understood, and so should we, that the issue isn’t solely who controls the means of production but the social relations that arise. If one class of people (native or foreign) uses ownership of the means of production to exploit others, that’s antagonistic and destructive. Modern China allows extensive private enterprise, but there are clearly strict limits on how far economic power may be allowed to translate into political power and social influence. In our degenerate Western liberal democracies, whatever modest limitations we may have once had in this regard have been largely if not wholly dismantled, hence our “democracies” have devolved into vast influence-peddling networks that are profoundly corrupt, manipulative, and ultimately self-destructive.

Though Mao was clearly able to entertain the apparent contradiction of pursuing socialism while embracing what he called “native capitalism”, we in the West remain perpetually confused by exactly what kind of system China has. If China is successful in economic terms, that’s because it is not socialist, but capitalist! When China does something that we in the West consider “illiberal”, such as pursuing Zero Covid, that’s because it is a totalitarian Communist dictatorship! Or that because China maintains public ownership of certain industries, it is pursuing “state capitalism”, a vague and unscientific term. If the primary contraction within capitalism is antagonistic social relations, then public ownership solves that. Other contradictions may arise, such as bureaucratization, but that is another matter.

Likewise, we hear a lot these days about the growing relationship between Russia and China, in particularly apropos of Xi Jinping’s visit to Moscow last week, which seems to have been a watershed event in ways with which we are only slowly coming to grasp. Economic ties between those two countries is growing with leaps and bounds, and we are routinely told that this happening despite that China is socialist while Russia is capitalist. The two countries clearly have different models of governance, but in reality both have mixed economies (combination of private and state-owned enterprises) and engage in centralized long-term economic planning, something we in the West used to do, but in the neoliberal age is considered obsolete. When was the last time you heard a Western politician discussing seriously the need for what we once called industrial policy? Long-term strategic planning? We don't do that anymore.

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Russia-China trade on pace to hit $200 billion this year Economic cooperation between the two nations has been strengthening amid outside pressure on.rt.com/c9sx

Moreover, as economic ties grow, the Russian economic system is likely to become more similar to the Chinese, without the explicit ideological framework of the past. Brussels-based analyst Gilbert Doctorow, who lived and worked in Russia for many years and continues to follow mainstream Russian media, draws our attention to recent comments made by Gennady Zyuganov, leader of the Russian Communist Party, which consistently polls around 20%, making it the largest opposition party in the Duma:

But the most interesting point Zyuganov had to make related directly to the visit of Chinese President Xi on the first three days of this week. The outcome of that visit he saw in the historic commitment of Russia and China to work in tandem to create a multipolar world order, while ensuring the prosperity of their peoples and the flourishing of their respective “civilizations.”  In this context, he urged Mishustin to consider that the Communist Party of the Russian Federation has long had special relations with the fraternal Communist Party in China. His people know officials in the provinces across China. And his party stands ready to advise the Government on developing close relations with China.

When approached by a television journalist after the parliamentary session, Zyuganov repeated his point about the coming “socialization” of the Russian economy, reintroducing practices that had proven successful in the days of the Soviet Union.

This might sound like the wishful thinking of a dyed-in-the-wool Leftist living in the NeoLiberal Russia that Yeltsin ushered in and Putin never really ushered out. But given the exigencies of war, the Russian economy is in fact being remade not just by enormous orders placed with the military industrial complex for munitions and weapons systems , but also through massive subsidies being held out to businesses to produce subassemblies and components essential to replace now sanctioned supplies for ships, aircraft and whatnot.

These changing realities in the domestic economy align very nicely with an ever closer Chinese partnership. One had to note Putin’s remarks to President Xi at the very start of the State Visit, when the two sat in armchairs and exchanged pleasantries in front of the photographers. Putin congratulated Xi on his recent reelection which he said reflected the high appreciation of the Chinese people for what the country has achieved under his stewardship. Putin went on to say that the economic achievements in China have been stunning, to the point that “one can envy them.”

In the couple of days since, Russian television journalists have expanded on that comment as praise for the competence of the entire Chinese political and economic management.  All of this points to the “socialization” of Russia that Zyuganov so hopes for.

(Gilbert Doctorow: “How the close partnership with China is changing Russia’s domestic politics”, 23 March 2023)

In the coming years, Russia and an increasing number of other countries will turn to China as an economic role model, eventually we in the West as well. Not because socialism. Or because capitalism. Simply because it produces better outcomes. It works better.