Skip to main content

How neoliberal globalization, hybrid economic model benefited China 'disproportionally'

By Richard D Wolff*
  
The year 2020 marked parity between the total GDP of the G7 (the U.S. plus allies) and the total GDP of the BRICS group (China plus allies). Since then, the BRICS economies grew faster than the G7 economies. Now a third of total world output comes from the BRICS countries while the G7 accounts for below 30 percent. 
Beyond the obvious symbolism, this difference entails real political, cultural, and economic consequences. Bringing Ukraine’s Zelenskyy to Hiroshima to address the G7 recently failed to distract the G7’s attention from the huge global issue: what is growing in the world economy vs. what is declining.
The evident failure of the economic sanctions war against Russia offers yet more evidence of the relative strength of the BRICS alliance. That alliance now can and does offer nations alternatives to accommodating the demands and pressures of the once-hegemonic G7. The latter’s efforts to isolate Russia seem to have boomeranged and exposed instead the relative isolation of the G7. 
Even France’s Macron wondered out loud whether France might be betting on the wrong horse in that G7 vs. BRICS economic race just under the surface of the Ukraine war. Perhaps earlier, less-developed precursors of that race influenced failed U.S. land wars in Asia from Korea through Vietnam to Afghanistan and Iraq.
China increasingly competes openly with the United States and its international lending allies (the IMF and the World Bank) in development loans to the Global South. The G7 attack the Chinese, charging them with replicating the predatory lending for which G7 colonialism was and G7 neocolonialism is justly infamous. The attacks have had little effect given the needs for such borrowing that drive the welcome offered to China’s loan policies. 
Time will tell whether shifting economic collaboration from the G7 to China leaves centuries of predatory lending behind. Meanwhile, the political and cultural changes accompanying China’s global economic activities are already evident: for example, African nations’ neutrality toward the Ukraine-Russia war despite G7 pressures.
De-dollarization represents yet another dimension of the now rapid realignments in the world economy. Since 2000, the proportion of central banks’ currency reserves held in U.S. dollars has fallen by half. That decline continues. Every week brings news of countries cutting trade and investment payments in U.S. dollars in favor of payments in their own currencies or other currencies than the U.S. dollar. 
Saudi Arabia is closing down the petrodollar system that crucially supported the U.S. dollar as the pre-eminent global currency. Reduced global reliance on the U.S. dollar also reduces dollars available for loans to the U.S. government to finance its borrowings. The long-term effects of that, especially as the U.S. government runs immense budget deficits, will likely be significant.
China recently brokered the rapprochement between enemies Iran and Saudi Arabia. Pretending that such peace-making is insignificant represents purely wishful thinking. China can and will likely continue to make peace for two key reasons. First, it has resources (loans, trade deals, investments) to commit to sweeten accommodations between adversaries. 
Second, China’s stunning growth over the last three decades was accomplished under and by means of a global regime mostly at peace. Wars then were mostly confined to specific, very poor Asian locations. Those wars minimally disrupted the world trade and capital flows that enriched China.
Neoliberal globalization benefited China disproportionally. So China and BRICS countries have replaced the United States as the champion of continuing a broadly defined global free trade and capital movements regime. Defusing conflicts, especially in the contentious Middle East, enables China to promote the peaceful world economy in which it prospered. 
In contrast, the economic nationalism (trade wars, tariff policies, targeted sanctions, etc.) pursued by Trump and Biden has struck China as a threat and a danger. In reaction, China has been able to mobilize many other nations to resist and oppose United States and G7 policies in various global forums.
The source of China’s remarkable economic growth -- and the key to BRICS countries’ now successful challenge to the G7’s global economic dominance -- has been its hybrid economic model. China broke from the Soviet model by not organizing industry as primarily state-owned-and-operated enterprises. It broke from the U.S. model by not organizing industries as privately owned and operated enterprises. 
China is following Lenin, who once referred to early USSR as state capitalism with task of transition to post-capitalist socialism
Instead, it organized a hybrid combining both state and private enterprises under the political supervision and ultimate control of the Chinese Communist Party. This hybrid macroeconomic structure enabled China’s economic growth to outperform both the USSR and the United States. Both China’s private and state enterprises organize their workplaces -- their production systems’ micro-level -- into the employer-employee structures exemplified by both Soviet public and U.S. private enterprises. China did not break from those microeconomic structures.
If we define capitalism precisely as that particular microeconomic structure (employer-employee, wage labor, etc.), we can differentiate it from the master-slave or lord-serf microeconomic structures of slave and feudal workplaces. Following that definition, what China constructed is a hybrid state-plus-private capitalism run by a communist party. 
It is a rather original and particular class structure designated by the nation’s self-description as “socialism with Chinese characteristics.” That class structure proved its superiority to both the USSR and the G7 in terms of its achieved rates of economic growth and independent technological development. China has become the first systemic and global competitor that the United States has had to face in the last century.
Lenin once referred to the early USSR as a “state capitalism” challenged by the task of making a further transition to post-capitalist socialism. Xi Jinping could refer to China today as a hybrid state-plus-private capitalism similarly challenged by the task of navigating its way forward to a genuinely post-capitalist socialism. 
That would involve and require a transition from the employer-employee workplace structure to the democratic alternative microeconomic structure: a workplace cooperative community or a workers’ self-directed enterprise. The USSR never made that transition. Two key questions follow for China: Can it? And will it?
The United States also faces two key questions. First, how much longer will most U.S. leaders persist in denying its economic and global declines, acting as if the U.S. position had not changed since the 1970s and 1980s? Second, how can such leaders’ behavior be explained when large American majorities acknowledge those declines as ongoing long-term trends? 
A Pew Research Center random poll taken among Americans between March 27 and April 2, 2023, asked what they expected the situation of the United States to be in 2050 compared with today. Some 66 percent expect the U.S. economy will be weaker. Seventy-one percent expect the United States will be less important in the world. Seventy-seven percent expect the United States will be more politically divided. Eighty-one percent expect the gap between rich and poor will grow. 
The people clearly sense what their leaders desperately deny. That difference haunts U.S. politics.
---
*Professor of economics emeritus at the University of Massachusetts, Amherst; visiting professor in the Graduate Program in International Affairs of the New School University, in New York. His weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are "The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself", "Understanding Socialism", and "Understanding Marxism". Source: Independent Media Institute
This article was produced by Economy for All, a project of the Independent Media Institute

Comments

TRENDING

Insider plot to kill Deendayal Upadhyay? What RSS pracharak Balraj Madhok said

By Shamsul Islam*  Balraj Madhok's died on May 2, 2016 ending an era of old guards of Hindutva politics. A senior RSS pracharak till his death was paid handsome tributes by the RSS leaders including PM Modi, himself a senior pracharak, for being a "stalwart leader of Jan Sangh. Balraj Madhok ji's ideological commitment was strong and clarity of thought immense. He was selflessly devoted to the nation and society. I had the good fortune of interacting with Balraj Madhok ji on many occasions". The RSS also issued a formal condolence message signed by the Supremo Mohan Bhagwat on behalf of all swayamsevaks, referring to his contribution of commitment to nation and society. He was a leading RSS pracharak on whom his organization relied for initiating prominent Hindutva projects. But today nobody in the RSS-BJP top hierarchy remembers/talks about Madhok as he was an insider chronicler of the immense degeneration which was spreading as an epidemic in the high echelons of th

The Vaccine War fails to reveal: Jabs not one of Indian scientists' 'proud' achievements

By Bhaskaran Raman*  On 28 Sep 2023, the movie “The Vaccine War” by Vivek Agnihotri was released internationally, as the story behind India’s Covid-19 vaccine development. While there will be many a review written, as for other movies, a technical review is important, as the film is supposed to be fact-based, on the science and scientists behind the science.

'Flawed' argument: Gandhi had minimal role, naval mutinies alone led to Independence

Counterview Desk Reacting to a Counterview  story , "Rewiring history? Bose, not Gandhi, was real Father of Nation: British PM Attlee 'cited'" (January 26, 2016), an avid reader has forwarded  reaction  in the form of a  link , which carries the article "Did Atlee say Gandhi had minimal role in Independence? #FactCheck", published in the site satyagrahis.in. The satyagraha.in article seeks to debunk the view, reported in the Counterview story, taken by retired army officer GD Bakshi in his book, “Bose: An Indian Samurai”, which claims that Gandhiji had a minimal role to play in India's freedom struggle, and that it was Netaji who played the crucial role. We reproduce the satyagraha.in article here. Text: Nowadays it is said by many MK Gandhi critics that Clement Atlee made a statement in which he said Gandhi has ‘minimal’ role in India's independence and gave credit to naval mutinies and with this statement, they concluded the whole freedom struggle.

Modi govt intimidating US citizens critical of abuses in India: NY Christian group to Biden

Counterview Desk  the New York Council of Churches for its release of an open letter calling on the Biden administration to “speak out forcefully” against rising Hindu extremist violence targeting Christians and other minorities in India. In the letter addressed to President Biden, Secretary of State Antony Blinken, and other major elected officials, the NY Council of Churches expressed "grave concern regarding escalating anti-Christian violence" throughout India, particularly in Manipur, where predominantly Christian Kuki-Zo tribals have faced hundreds of violent attacks on their villages, churches, and homes at the hands of predominantly Hindu Meitei mobs.

Green revolution "not sustainable", Bt cotton a failure in India: MS Swaminathan

MS Swaminathan Counterview Desk In a recent paper in the journal “Current Science”, distinguished scientist PC Kesaven and his colleague MS Swaminathan, widely regarded as the father of the Green Revolution, have argued that Bt insecticidal cotton, widely regarded as the continuation of the Green Revolution, has been a failure in India and has not provided livelihood security for mainly resource-poor, small and marginal farmers. Sharply taking on Green Revolution, the authors say, it has not been sustainable largely because of adverse environmental and social impacts, insisting on the need to move away from the simplistic output-yield paradigm that dominates much thinking. Seeking to address the concerns about local food security and sovereignty as well as on-farm and off-farm social and ecological issues associated with the Green Revolution, they argue in favour of what they call sustainable ‘Evergreen Revolution’, based on a ‘systems approach’ and ‘ecoagriculture’. Pointing ou

Link India's 'deteriorating' religious conditions with trade relations: US policymakers told

By Our Representative  In a significant move, Commissioners on the United States Commission on International Religious Freedom (USCIRF) have raised concerns about the “sophisticated, systematic persecution” of religious minorities by the government of Prime Minister Narendra Modi at a hearing on India in Washington DC.

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

Why is green revolution harmful for nutrition, food safety, environment, climate change

By Bharat Dogra*  A lie repeated a hundred times will not turn a lie into a truth. The big media should realize this and stop perpetuating the lie of the green revolution saving India from hunger, long after the world has awakened to the reality of how harmful the green revolution has been from the point of nutrition, food safety, environment and climate change.