Will the Bourgeoisie Ever Rule in China?

Will China’s capitalists who are a very important part of the contemporary Chinese economy forever acquiesce to a lack of political power?

After all, despite their ability to exist and thrive in the very complex jungle of ownership types, they operate in an environment where their formal rights can be limited or revoked at any moment. Not least because of the prevailing uncertainty of property rights, they are under the constant tutorship of the state.

Or will they — as they become stronger and more numerous — organize and influence the state, and finally take it over as it happened in Europe in the 19th century.

The European path, as sketched by Marx, seems in many respects to have a certain iron logic: Economic power tends to emancipate itself. As it does, it starts to look after, or impose, its own interests.

Uncomfortable questions

This leads to some very uncomfortable questions for the Chinese leadership: If capitalists have economic power in their hands, how can they be stopped? That is a question that President Xi, despite (or even because of) his not being term-limited any longer, must have asked himself.

It is also a question that the CCP’s highest doctrinal councils must have been pondering in earnest as they seek to chart a course for China’s future prosperity.

In their assessment, they know that they can rely on almost two millennia of an uneasy and unequal partnership between the Chinese state and Chinese business where business could thrive, become rich but never aspire to rule the state.

This history represents a formidable obstacle that might keep the state autonomous and on what the late Giovanni Arrighi in his seminal 2009 book “Adam Smith in Beijing: Lineages of the Twenty-First Century” has called the Smithian path.

Thus, the question of democratization of China needs to be posed in a very different fashion from what we normally do. The key question is whether Chinese capitalists will come to control the state and, in order to do so, use representative democracy as its tool.

In Europe and the United States, that tool was used by capitalists very carefully. It was administered in small doses as they expanded their respective franchise often at the snail’s pace.

Whenever there was a potential threat to property-owning classes (as in England after the French Revolution or in France after the Restauration, or in Hungary and somewhat less in Austria throughout the existence of the Dual Monarchy), the franchise was further restricted.

It is this “dance,” on the one hand with the state that capitalists tried (and succeeded) to take over, and on the other hand, with the poor who could use electoral democracy to take away capitalists’ property, that defined European path to democratic capitalism.

Thus by 1918, after the calamities of the First World War, it had become politically impossible for kings and their associated nobility and royally “approved” merchants to continue with the imposition of literacy tests or income censuses on the population at large.

Democracy on the march

Democracy was finally on the march. Even the Southern United States was ultimately pressured by the Civil Rights Act of 1965 to stop using a variety of means to disenfranchise voters.

Chinese democracy, if it comes, would thus likely be, in the legal sense, of the same type observed elsewhere – one-person, one-vote.

And yet, given the precarious nature and the still limited size of the propertied classes in China (one study of the middle class in China puts it at 1/5th of the urban population), it is not obvious whether democracy could be maintained.

Chinese capitalists, like the European and American of the yore, have thus two difficult tasks to accomplish: Conquer the state and not allow the poor to expropriate them.

Democracy failed in China in the first two decades of the 20th century. That is, of course, the historical reference point employed by Chinese leaders today to fend off similar efforts one hundred years later.

China is not the West: Smith vs. Marx

Moreover, they argue categorically, China is not the West. But what exactly is the difference, in the long-term context, between China and the West?

This is a huge question that, over the past two decades, has acquired additional importance due to the rise of China. This centrally concerns the organization of China’s economy.

The afore-mentioned Giovanni Arrighi starts from a dichotomy between Smithian “natural” path of development of capitalism and Marx’s “unnatural” (the term is Arrigihi’s) path.

Smith’s natural path, “the natural progress of opulence” in the terminology of The Wealth of Nations, is that of a market economy of small producers that grows, through division of labor, from agriculture into manufacturing and only later goes into domestic trade and eventually into long-distance foreign trade.

This path is “natural” because it follows our needs (from food to textiles to trade, from village community to town to faraway lands) and thus does not jump over the stages.

Throughout—as Smith is careful to mention—the state lets the market economy and capitalists thrive, protects their property and imposes tolerable taxes. At the same time, it does maintain its relative autonomy when it comes to economic and foreign policy.

Arrighi summarizes it thus: “The Smithian features…[are] the gradualism of reforms and state action aimed at expanding and upgrading social division of labor; the huge expansion of education; the subordination of capitalist interest to the national interest and the active encouragement of inter-capitalist competition” (p. 361).

Marx’s approach

Marx’s approach in contrast was that he took what he observed in Europe in his time to be a “normal capitalist path.” But what Marx thought of as “normal” was a system which, in Smith’s words applied to Holland, (1) inverted the natural progress by developing commerce first and agriculture last, a system that was thus ”unnatural and retrograde” and where (2) the state had lost its autonomy to the bourgeoisie.

In such a regime, capitalists took over the state and, as Marx famously wrote, the government became “a committee to manage the common affairs of the bourgeoisie.” In the Marxian path, in pronounced contrast to the Smithian view, there is no state autonomy vis-à-vis bourgeoisie.

There is just one problem with this view from the Chinese vantage point. From the Song to the Qing dynasties, China followed an alternative path of development that is actually much closer to the Smithian view.

China’s market economy back then was far more developed than in Western Europe (probably until about 1500). However, those commercial interests were never able to organize themselves sufficiently, so that they could come even close to dictating Chinese state policy.

The authoritarian state left rich merchants in peace, so long as they did not threaten it (i.e., as long as they did not “grow too big for their boots”). But it always kept a wary eye on them.

Present day China

This leads us to the present-day China. The current Communist-party dominated government, and the distribution of political power between it and the already formed capitalist class, is reminiscent of this traditional relationship.

The Chinese government is helpful to the interests of the bourgeoisie, but only so long as these interests do not run contrary to the objectives of the state (that is, of the elite that runs the state).

As a result of this commingling, state-owned corporations raise private capital on the stock-exchange, communal property is mixed with private property and state firms have foreign private participation etc.

Under these circumstances of deliberate blurring, it is no surprise either that Communist-party organizations exist within fully privately-owned companies.

They may be useful for capitalists to the extent that they are able to coopt such organizations to lobby the party-state on their behalf. Or differently, their presence can also be enervating as they are yet another constituency to be pleased and bribed or another body that could, if such is the political climate, turn against China’s budding capitalist class).

Conclusion

In conclusion, at least given the weight of Chinese history – as well as the traditionally subservient role of merchants vis-à-vis the state even long before Communist times – it stands to reason that China’s path of political and economic development will continue to differ from that of the West. It may remain more Smithian than Marxist.

Editor’s note: Parts of the text to be published in the forthcoming book “Capitalism, alone” (Harvard University Press, 2019).