Yan Yilong, "Socialism Riding Herd on Capital"

Articles from the Liberal and revisionist theoreticians of China

------------

Chapter Five of Yan Yilong, Bai Gang, Zhang Yongle, Ou Shujun, He Jianyu, The Working of the Great Way:  The Chinese Communist Party and Chinese Socialism [2]

Translation by David Ownby

“Socialism Riding Herd on Capital” is taken is a collective work published by five young New Left intellectuals in 2015, with a second edition published in 2018.  The authors are:  Yan Yilong (b. 1972), Professor of Public Management, Tsinghua University; Bai Gang (b. 1977), Professor of Chinese, Fudan University; Zhang Yongle (b. 1981), Professor Law, Beijing University; Ou Shujun (b. 1977), Professor of International Relations, China Renmin University; and He Jianyu (b. 1975), Professor of Marxism, Tsinghua University.  Senior scholars Wang Shaoguang 王绍光 (b. 1954) and Pan Yue 潘岳 (b. 1960), both prominent members of China’s New Left, penned glowing prefaces to the book, whose publication appears to have made quite a splash."

-----

“If a small number of people obtain that much wealth, while the majority of people do not, and things continue in such a way, then one day there will be problems.  Unfair distribution leads to polarization, and at a certain point problems will emerge.  This problem has to be solved.” Deng Xiaoping (1993)

“In the past few years doubts have been publicly expressed inside China and out as to whether what China is currently practicing is still socialism.  Some people call it ‘capitalist socialism’ while others plainly call it ‘state capitalism’ or a ‘new bureaucratic capitalism.’  These are all completely wrong.  We say that socialism with Chinese characteristics is socialism, which means that regardless of what reform or what opening we might practice, we will always uphold the path of socialism with Chinese characteristics, the theoretical system of socialism with Chinese characteristics, the institutions of socialism with Chinese characteristics, and we will uphold the basic demand of the 18th Party Congress to achieve the victory of socialism with Chinese characteristics.” Xi Jinping (2013)
 
1.  Capital Becomes the Highest Priority

Since the long 16th century,[4] human history has entered the era of modern society.  One unfortunate consequence of modernity is that capital has replaced everything else, becoming the highest priority.

The logic of capitalism pushes everything aside, becoming humanity’s highest rationality.  It wipes away the halo of the gods of religion, tears away the veil of family warmth, and destroys the fetters of feudalism so that now “there is no nexus between man and man other than naked self-interest, other than callous ‘cash payment.’”[5]

The logic of capital also controls changes in the realm of politics, the castrated “democratic system,” the “universal” modern regime-type created by competitive elections and the representative system.  Capital has molded a new culture for humanity, cultivating “public” intellectuals of various stripes, financing all sorts of “neutral” academic research, controlling “public” opinion in the modern media.  Capital has reorganized the world order, forcing the Americas, Oceania, Africa and Asia to enter the global system of capital and to submit to the ruling position of the West.

The strength of capital is like magic, summoning up from below a bright, beautiful modern world, offering a fake show of peace and prosperity.  “The bourgeoisie, during its rule of merely one hundred years, has created more massive, more colossal productive forces than have all preceding generations together.”[6]  Yet this is a world offering a false promise of peace, and not the truly peaceful world to which humanity aspires.

Traditional society fell apart, and “into [its] place stepped free competition, accompanied by a social and political constitution adapted to it, and the economic and political sway of the bourgeois class.”[7]

The basic nature of capital, which is to reproduce and multiply, has brought the intensity and scale of free competition between individuals and organizations to unprecedented levels.  The moderate, localized competition that had characterized traditional society has been transformed into a cruel life or death competition that spans the entire world.  Everyone’s battle to win the struggle for existence has greatly stimulated people’s enthusiasm for labor and creativity, and at the same time brought the productive capacity of mankind to unprecedented heights.

Capital not only set the stage for competition, it also organized competition’s armies.  High-level free competition is carried out among highly organized competitors, which means that every individual is assembled to be a cog or a screw within the machine of competition, which means that an efficient bureaucracy is the cornerstone of modern society.

The cruel logic of “vanquish or perish” has greatly stimulated innovation, lending the capitalist system its “capacity for creative destruction,” and the competition to innovate in business models and in product production, together with the competition to lengthen working hours and reduce costs, “were as different [from traditional forms of competition] as cannon bombs from unarmed attacks.”[8]

Capital has become a necessary evil in the prosperity of modern society, as the pitiless lashes of the whips in the capitalists’ hands tightened the springs of society as a whole, moving world history from tradition to modernity.  Faster, faster!  The 18th, 19th, 20th, and 21st centuries!

What elevated capital from a necessary evil to the “gospel of the world” was Adam Smith’s discovery of the “invisible hand.”  Mankind’s selfishness could improve the welfare of the entire society, what a masterful social arrangement!  Striving to accumulate worldly goods while at the same time amassing spiritual rations for paradise, humanity’s belief in modern society is:  making one’s family wealthy is the greatest good on this earthly world, while being poor is a kind of sin.

The “invisible hand” is the marvelous adjustment mechanism of humanity’s economic activity.  Since the information necessary to economic activity is dispersed and the nature of human activity is multi-centered, the only reasonable way to regulate economic life is via the self-adjusting mechanism of the market.[9]  Milton Friedman praised the marvelous integration of the price mechanism and property rights, adding that “I chose the word ‘marvelous’ carefully.”[10]  And what is all the more marvelous is that it can, like a water engine, continue to turn forever.

After centuries of institutional experimentation and competition, capitalism has achieved a position of superiority from which it cannot be displaced.  The strength of capital has become society’s greatest strength, and this is an irrefutable fact.

2.  21st-Century China's Greatest Crisis 

Engels once used a metaphor that left a deep impression:  capitalism’s self-destruction is as inevitable as the stars’ collision with the sun.  More than a century has passed, yet this prediction still has not yet come to pass.

In that case, is Marx’s criticism of capitalism already obsolete?  Or is it rather the case that the timeline for this ever-diminishing self-destruction is so long that we cannot make a judgement on the basis of a few short generations of human life?

One thing can be affirmed:  capitalism’s short history of a few centuries is long from the point of view of an individual, but from the perspective of the vast stream of human history, it is a mere moment.  Depicting an institutional arrangement stable in one moment of history as “the end of history” is surely a vain conceit.

a.  China’s Faustian Moment

In the 1980s and 1990s, following the relative decline in efficiency of the classical socialist economic model and its collapse throughout the entire world, China faced an epochal question concerning where socialism was going.

Just as Faust had to make a pact with the devil to enjoy the world, socialism had to make a pact with capitalism in order to achieve prosperity.  China’s market reforms achieved a huge success, and in the short period of thirty years, China was transformed from a poor country into the world’s second largest economy and a middle- to upper-income country. 

Yet the question is:  who will ultimately win the bet?  After socialism has achieved wealth and power through the power of capital, will the cost of the wager be her socialist “soul?”  When did Faust, who remained clear-headed about the temptation of the devil, lose his bet?  According to Goethe’s parable, the agreement was that in return for his unthinking admiration of the devil’s world, Faust would lose his soul to the devil.

When the country goes mad over the power of money, when the intellectual elite argues that it must use the logic of the market to arrive at a broader understanding of the justice of the Opium War and decide the legitimacy of child labor from the perspective of market needs, when the star-chasing hipsters of American democracy are worshipped as the goddess of liberty, when the sacred rights of the wealthy cannot be infringed on, then the voices of the working masses fall silent.  “The clock has stopped and the hands are pointing down.”  It seems that China’s socialist cause has reached the Faustian moment of losing the wager.

Without exaggeration, 21st century China’s greatest crisis is that capitalist fundamentalism will take the stage, achieving a position of priority from which to control all other domains.  What is the logic of capital?  Simply put, it is that money is king.  Benjamin Franklin said it well:  “Money can reproduce itself, can bloom and bear fruit.”  This “mysterious thing” that spreads as wildly as a virus has become the greatest personal God ruling over contemporary society.

b.  Marx’s Critique in the 21st Century

As humanity enters the 21st century, Marx’s criticism of the capitalist system has not become obsolete, but is expressed in a yet deeper and more hidden way.  When a society places the logic of capital in a position of dominance as its highest principle, this is a society that is upside down.

Marx saw economic crises as the fatal flaw in the capitalist economic system, like an uncontrollable devil summoned forth by the practices of the capitalist class itself.  Every ten years, the capitalist system calls forth the specter of capitalism.  The most recent episode was the 2008 financial crisis that occurred in the US, a financial tsunami that originated in the heart of capitalism—Wall Street—before spreading to Europe, developing countries and world as a whole.  Six years later, the entire world economy remains shrouded in its shadow.

Marx astutely pointed out that the capitalized world is of necessity a polarized world:  at one pole is the concentration of wealth and luxury, and at the other is “the accumulation of misery, agony of toil, slavery, ignorance, brutality, and mental degradation.”[11] 

Twenty-first century capitalism has entered a more civilized phase.  Equality has won a place as a core capitalist value alongside of liberty.  But this equality is only formal equality.  Whether in the case of a healthy market or a perfect rule of law, what is guaranteed is mere formal equality.  In each case, they take individuals with different circumstances of birth, resources, and abilities—sometimes these differences are natural differences—and see them as abstractions, as identical individuals to be treated without difference.

Beginning from a world of formal abstract equality, we have arrived at a very real world of extreme unfairness.  Compared with the Marxist era, the contemporary world has largely solved the problem of absolute poverty; in the past 30 years, the world poverty rate has declined, to the point that we can optimistically imagine the complete end of human poverty in the not too distant future.  Recently, the World Bank announced the ambitious goal of reducing the percentage of the world population surviving on less than 1.25 US$ a day to less than 3% by 2030.

Yet this is not the result of social equality, but instead is because the social loaf is large enough that the capitalist fat cats can afford some crumbs to feed the masses.  Absolute poverty has been reduced, but relative poverty has gotten worse.

In fact, the polarization of contemporary society has reached frightening proportions.  An Oxfam report notes that the amount of wealth possessed by the world’s 85 richest people is equivalent to the entire property possessed by the world’s 3.5 billion poorest residents.  The capitalist market economy is fact a game of opportunity and equality, but when it’s time to eat, one banquet is set for 85 people, while 3.5 billion have to squeeze around the other table.

In 2014, Thomas Picketty’s new book, Capital in the 21st Century, made waves in the West as soon as it was published.  This book, a tribute to Marxist criticism, acutely touched the sore spots of Western society.  He marshalled a great deal of evidence to prove that, from a long-term perspective, return on capital is always higher than the rate of economic growth, which means that the income gap between capitalists and workers can only increase over time, and that polarization is the enduring historical state of capitalist society.     

Changes in capitalism over the past 20 or 30 years herald the collapse of the myth of bourgeois society.  The idle rich bourgeoisie is gradually turning into a hard-up “moderately miserable” class [i.e., the middle class], as the olive-shaped income distribution becomes an M-shaped income distribution. 

Humanity has already arrived at a pyramid-shaped society where a tiny minority of people has seized vast amounts of wealth, a society characterized by the antagonism of the 99% majority and the 1% of the wealthy.  Taking income in the United States in 2012 as an example, the wealthiest 10% of the population had seized almost 50% of income, and the richest 1% almost 20%, and the 0.1% at the very top of the pyramid had almost 10%.  This unequal distribution is really frightening!  At present, the richest 10% of Americans control 71% of the country’s wealth, and the richest 1% control 40%.

c.  “Gazing out from the Duojing Tower, One Can but Sigh 危楼还望，叹此意”[12]

And China is no exception!

In 30 years of reform and opening, China has built the fastest growing economy in the history of the world, but at the same time rapidly transformed a relatively equal society into an extremely unequal society.  According to state statistics, China’s GINI coefficient was only 0.317, which climbed to 0.4, sounding an alarm, in 1999, and by 2008 had climbed further to 0.483, a level of inequality greater than that found in the United States.  China had become one of the most unequal societies in the world in terms of income inequality.

In recent years, China’s GINI coefficient has declined, in 2013 to 0.473, but this is principally the result of diminishing differences in terms of regional inequalities and urban-rural inequalities.  But the structural contradiction causing the growth in the difference between income earned from capital and income earned from labor has not changed, as illustrated by the continuing decline of the proportion of inhabitants' income in the distribution of national income, and the proportion of labor compensation in the initial distribution, which is much lower than the world average.

China’s wealth gap is also frighteningly large.  The data reveal that China’s wealth gap in terms of family property is continuing to grow.  In 1995, China’s GINI coefficient for family net worth was 0.45.  It was 0.55 in 2002 and 0.73 in 2012.  The richest 1% of families possessed 30% of the wealth, and the richest 10% of families somewhere between 63% and 85%.  If proper measures aren’t taken to get this under control, China’s polarization between rich and poor will grow increasingly virulent, and political promises of a “shared wealth” will have become pie-in-the-sky empty promises. 

Alas!  The so-called China Dream is merely something for the losers to revolt against![13]

“In the morning he was but a simple farmer working in the fields, but in the evening he took his place in the palace of the son of heaven 朝为田舍郎，暮登天子堂.”  From of old, China has been a mobile society in which the lower classes could rise through the examination system, even if this path was very narrow, which was the stuff of dreams for generation after generation of youth.

We might call China since reform and opening a dream factory.  Practices like an equal university examination system, a competitive economy, and open recruitment of government workers supplied an endless supply of possibilities for the Chinese people.  Which kind of “Mr. Perfect” do you want to be?  After a generation of striving, the majority of Chinese were living their dream lives.

But in recent years, things have gotten worse and worse.  The depredations of the “children of the first rich generation 富二代,” of the “children of the first generation of [corrupt] officials 官二代, and the “children of the superstars 腕二代”, together with a deepening hatred of the rich, has meant that the paths leading upward through individual striving and effort gradually narrowed off.  With the increasing discrepancy in wealth between rich and poor, and with class polarization and market competition entering the stage of passing wealth on to the next generation, things have reached the point where “poor and blank” losers feel inadequate and frustrated, be it in terms of the market, education, or employment.  “Knowledge will change your destiny” might as well mean “moving bricks 搬砖.”[14]  “Hard work brings victory 爱拼才会赢,” is not as good as “hitting on Dad 拼爹.”[15]  The hard-working “poor second generation 贫二代,” after a decade or two of unrelenting struggle and competition, has only succeeded in becoming a high-class loser rather than a low-class loser.

“Absolute power corrupts absolutely.”  The corruption of capital is a systemic corruption, the worst hotbed of social injustice.  Compared to the billions or trillions dollars of wide-open capitalist corruption, the corruption of the officials in their dark rooms is like the little trickster seeing the big trickster, the fly running into the tiger.

A certain number of the rich became rich because their contribution to society has been greater than that of ordinary workers, and we should be duly respectful of such entrepreneurs, and ensure that the wealth gods of this generation of heroes remain untouched.

But a certain number of rich did not really get rich through their contribution, but rather through rent-seeking--another term that has wrongly been applied to the government.  And similarly, we should accordingly call these people “capitalists.”  In other words, their talent lies not in making bigger cakes, but in finding new ways to cut up the cakes of others.

Look at the property market.  At one end there are the big property developers who do not have to create wealth, but instead rake in huge profits simply from land enclosures, while at the other end there is the salaried class that works hard all its life without being able to afford a simple house.  Why is it that whenever land prices rise, property developers need to do a cover sale 捂盘?  It is because they want to convert the inflation, the public benefit produced by population increase and economic development, into their personal profit through rent-seeking.  As Henry George (1839-1897), the late 19th-century American socialist activist and economist, long ago pointed out, this benefit had been created by the masses, and hence should be returned to the people.

Look at the financial market.  At one end are the dealmakers, the fat cats that buy and sell everything, while at the other end are the countless individual investors.  These “financial elites,” employing a well-packaged form of rent-seeking that Joseph Stiglitz has called the most evil of that of contemporary society, cleverly use predatory loans and an avalanche of credit cards and sacrifice those who are ignorant or not plugged-in to their search for windfall profits.[16]

Hidden under the surface of fair competition lies capital’s astute plunder of the wealth of the masses, or what we call rent-seeking.  And even land developers and bond-dealers would be ashamed to say that this is simply the result of a fair distribution based on the respective contributions of the different factors of capital and labor to economic development.

The complexity of China’s problem is made all the worse by the association of capitalist rent-seeking with the rent-seeking of the powerful, which is complicated and difficult to resolve, and has become a two-headed monster.  These are two serious situations that the central authorities must deal with in the current campaign against corruption.  They must defeat the tigers of power as well as the tigers of capital.

Has the expansion of representative democracy throughout the world since the 19th century, with its political freedom, democracy and universal elections, served to constrain the logic of capitalism so that politics follows the will of the “majority?”  Or rather has it enabled capitalism to control politics in a shrewder fashion?

Lenin long ago pointed out that “democratization” had not really eliminated the basic nature of bourgeois control of the state, but rather revealed its basic nature.[17]  The functioning of modern Western democracies illustrates in fact that representative democracy allows capitalists to more readily control political groups through campaign contributions and manipulation of interest groups. Otherwise, how do you explain the ridiculous fact that the tax rates for the super rich are lower than those of their secretaries?

Of course, politics in contemporary Western countries is the result of the balance of power among various forces, but capital remains the strongest force, the one in the most dominant position.  The facts are clear:  the newly arisen bourgeois class, the transformation of the medieval aristocracy, together with their capital, are the rulers of the state, and everyone else is but a servant of one industry or another.

The logic of capital has already penetrated all aspects of Chinese political life, local governments naturally look favorably on capital, and ordinary workers are less and less represented in people’s congresses and consultative assemblies at every level. 

The power of capital to set the terms for policy discussions, as well as its power to impact society, surpasses those of other groups.  The “property development faction” and the “financial faction” operate as if “the power of the world is invested in me.”  What should be mentioned in this context is that China is one of the world’s friendliest countries to capital, with no tax on real estate or on inheritance or on capital moving in or out of the country.  From this perspective, China might be seen as a “paradise” for capitalists.

In today’s China, the reason that the strength of capital is still unable to control politics and dictate policy is that it is still not the strongest force in the country.  But if China develops a system with a tripartite division of powers, as many are strongly advocating, a multi-party regime with competitive elections, then the greatest recipient of the benefit of the division of power will be capital, after which capital will bend political power to its will and deprive the people of democracy.

The last and most important rampart under attack by capital is the mind of the people.  Gramsci said that the struggle between capitalist and socialist ideology is a long process.  Socialist ideology is the theoretical weapon of the laboring masses, and the base on which is relies for its long-term development is the strength of morality and justice.  By way of contrast, capitalist ideology employs the strength of capital to penetrate every corner of society, becoming omnipresent.

China is at present facing a huge ideological crisis.  The cultural system has been largely marketized, with monopoly capital controlling all new media, the Western system of humanities and social sciences is spreading its message unchanged, and some scholars have come to believe that it is natural to “speak for the wealthy.”

In fact, both within the establishment and without, countless people state openly or believe secretly that what we call socialism is nothing more than the ideological remnants of the centralized planned economy, or in other words that it was nothing more than a cover affording easy access into China of the modern Western “civilized world.”

The weeds turning socialism into an empty promise are sprouting wildly, and soon will take over the great house of the republic.  At that point, capital will have accomplished its final mission, which is achieving control of the minds of the people, and with this, the ideological base for socialist political rule will have dissolved. 

Looking back at history, the strength of capital is such that even the establishment of a league of people’s democratic dictatorships in the eastern half of the globe was insufficient to stop it, nor will capitalism’s comeback be turned away by the will of the people.  Comrade Mao Zedong, the creator of socialist China, in his later years often recited the pessimistic poem by Chen Liang, of the Southern Song, Dongjing Tower, in which Chen criticizes the hypocritical passivity of the Southern Song rulers who were hiding behind the natural barriers of mountains and rivers and allowing the Jin to occupy China’s central plains.[18]  He would pound the table, sigh, and weep painful tears.

3.  The First Stage of Socialism:  A Market Economy in the “Public Interest”

The logic of historical progress consists of a thrilling leap into one’s opposite, after which the combination of affirmation and denial, ego and non-ego, becomes the midwife of a higher form of self-affirmation. 

Without the help of capital’s strength, socialism cannot succeed; but without socialist constraints, capitalism becomes a raging flood, a wild beast.  Capital truly is a steady horse that propels society forward, but this horse must wear the blinders of the “public interest” in order to better serve the interests of all of the people.

China’s market reforms were launched from the foundation of a centrally planned economy, and the reformers adopted a pragmatic attitude in their guiding approach, so that at the same time that they gradually brought in the market economy, they also preserved the legitimate heritage of classical socialism.  These socialist elements served to offset the negative effects of the market reform, and the Chinese path thus provided a new solution to the crisis of global capitalism.

The economic system of the first phase of Chinese socialism can be generally described as a market economy system in the “public interest.”  “When the great Way is practiced, tianxia belongs to the people 大道之行，天下为公.”  “Public interest” requires seeking out the interests of the majority, and not the interests of a small elite. 

Rousseau once perceptively pointed out that the sum total of the wills of all people in a divided society (the cumulative will) does not form the common will (general will).  The economy is also like this:  behavior based the mutual exchange and the mutual interest of dispersed individuals does not maximize the welfare of society at large, a proof of which is the glaring disparity between rich and poor in the contemporary world.

A public interest market economy charts a path between classical socialism and classical capitalism.  It fully exploits the capitalist system’s advantages of dispersal, competition and innovation, while at the same time preserving the advantages of socialism, overcoming the market economy’s tendency toward differentiation and blindness, constituting a new economic order of an “orderly life” in which “the private does not forget the public,” ensuring that the vital force of the market economy is truly anchored in the long terms interests of all of the people.

“The Way is made up of one part yin and one part yang.”  China’s public interest market economy can be expressed as circle within a square.  The circle is continually expanding, representing the vibrant market economy system.  The square surrounding it represents the features of socialism with Chinese characteristics. [19]   The circle and the square are like yin and yang, the invisible and the visible hand mutually completing one another and pushing one another forward.

China is already the world’s most vibrant market economy.  The scale of China’s market, and the speed of change within it, the strength of its innovation and the intensity of its competition have all reached a level of which many countries are incapable, to the point that some people consider it more capitalistic than other economies in the world.  China has not only shaken the world with its “made in China,” “Chinese innovation” has also caught the world’s eye.  In the coming decades, many unimaginable innovations that will change the life of mankind will occur in China.

There are four socialist elements in China’s market economy, or four special features of its orientation toward public interest.  These are:  “top-level planning,” “public capital,” “platform-type local governments 平台型的地方政府,” and “a state based on popular livelihood 民生国家.”  Top-level planning provides conscious guidance to the blindness of the market, the public benefit of public capital offsets the selfishness of the market economy, platform-type local governments improve the organizational level of economic competition for economic actors, and a state based on popular livelihood will supply basic functions 提供兜底功能 and stimulate the developmental capacity of vulnerable groups.

a.  Top-Level Planning

Marx long ago understood that knowledge is the basis for effective operation of the economy.  He pointed out that the blindness of economic life was the weak point of capitalist society, that “constant anarchy and periodical convulsions” represent the fatal flaws that capitalist production cannot avoid.  For this reason, he imagined the development of the planned economy, which would provide guidance for economic activity through proportionate, conscious measures, eliminating at a basic level the blindness of economic activity.

Several decades of practice of the centralized economy in the world proves that Marx’s plan went too far.  Because the information required for economic activity exists in dispersed fashion, central planners cannot provide the necessary information, and humanity will never be able to submit economic activity to central planning.

But there are two sides to every coin, and the other side of the currency of truth is that overall knowledge concerning society as a whole and its long-term interests is also indispensable.  One important manifestation of the superiority of socialism is its capacity to make use of this overall knowledge.

China’s central government is a government that engages in strategic planning and is highly aware of what it is doing.  There is no other central government in the world that has been able to lead the people for several decades, consistently seeking our country’s modernization and the great revival of the nation, not without ups and downs, of course, but without change in its general direction.  Through one strategic step after another, through generation after generation of continued struggle, it has unstintingly piloted the great ship that is China from an ancient, rundown shore toward a beautiful, modern shore.[20]

The fact that the CCP has held power for a long time means that their line and direction can be relatively stable in the long run, and that their policies have continuity.  In comparison, in the Western system of party rotation, the party in power and the party out of power are mutually antagonistic, and while at first glance this looks as if they balance one another out so that the country steers a middle course, in fact it often becomes a tug of war, veering now to the east and now to the west, so that when things go well the boat proceeds a bit more slowly, but when things go poorly it goes around in circles or backs up.  The country can even sink into a whirlpool of political stagnation, which is why it is not surprising that Obama, the “Yes I Can” president, six years later turned into the “No I Can’t” president.

China has already produced a complete set of well-established top-level planning mechanisms, as well as a cycle of national planning and implementation that begins and ends in practice.  Both the Party Congresses and the Plenary Meetings of the Central Committee are meetings designed to decide on national policy.  The Party Congresses decide on the basic line for the coming five years, and once the line has been set, the cadres become the most important elements, which is why the first and second Central Committee meetings respectively propose the name list of the personnel that will make up the Party organization and the State organization.  The third Central Committee meeting make plans for structural reform and the fourth Central Committee meeting discusses Party building, the rule of law, and other weighty issues.  The fifth Central Committee designs the five-year plan for economic and social development, the sixth Central Committee discusses other important strategic issues, and the seventh Central Committee prepares for the next Party Congress.[21]

There is no other political party in the world that continually defines its country’s line of development, and no other country that can first inscribe its own ideals in the Party program, subsequently in the decisions of the National People’s Congress, and finally on the 9.6 million square kilometers of our territory.  China is a country in which “words require acts and acts require results 言必行，行必果.” 
On the whole, all of China’s strategic goals can be realized.  Of the 22 goals listed in the 15th five-year plan, 19 were accomplished, and important progress was made on the remaining three. 

As strategists and doers, the CCP has already destroyed Hayek’s myth that mankind cannot engage in “social engineering.”  The CCP acts exactly like social engineers, continually designing and carrying out blueprints.  The interests of the people as a whole are the beginning and end-points for the top-level planning of the Party and government.  Leng Rong 冷溶 (b. 1953), the Director of the Party Literature Research Center, CPC Central Committee, used the following metaphor:  Like students learning a formula, to obtain the result of satisfying the people, the Party and the Government continually search out solutions and divergences and translate them appropriately into action.

b.  Public Capital

The most basic feature of the socialism Marx imagined was undoubtedly that of the public ownership of the means of production.  The logic of this is very clear:  public ownership represents the means of production associated with already socialized productive power; public ownership can eliminate the economic basic of capitalist exploitation, and hence at a basic level do away with economic crises and the polarization of rich and poor.

With the collapse of centralized planning throughout the world, the Chinese economic system also began the process of transformation to a market economy, and the state economy that had been part of central planning faced questions about its future.  When Margaret Thatcher, former Prime Minister of Great Britain, visited China in 1991, she observed that:  “Socialism and the market economy cannot accommodate one another, socialism cannot do the market economy.  If you want a market economy you first have to have capitalism and private ownership.” 

China’s contribution is to have destroyed the myth that public property rights cannot mix with the market economy, because the glowing results of thirty years of economic reform in China have proven that one can simultaneously develop the market economy and strengthen the public economy.  The “Decision” of the Third Central Committee of the Eighteenth NPC was yet another milestone, as the reform of the basic economic system of socialism and the market economy entered a new stage, and the public  economy, having achieved the strategic transition from property to capital, realized, at a higher level, a deep merging with the market that was henceforth to play a decisive role in the economy.

After reform and opening, large-scale state-owned enterprises, that had accounted for 78% for the value of industrial output in 1978, saw their share fall to 27% at the present day.  Is it true, as some firms and scholars have argued, that this percentage remains too high, and that it should fall to the world average at roughly 10%?

The market economy is a measure that can be employed by both socialism and capitalism, but once the word “socialism” loses its meaning and we align everything we do with the methods of advanced Western countries, privatizing state-owned enterprises and land, promoting small government, then the differences between a socialist market economy and capitalism will be thinner than window paper!

Just as Comrade Xi Jinping has pointed out:  “Deepening the reform of state enterprises is a weighty affair; not only can we not weaken state-owned enterprises, we should strengthen them.  Strengthening state-owned enterprises in the process of deepening reforms requires self-improvement, like a phoenix rising from the ashes.”

The “Decision” of the Third Central Committee of the 18th NPC concerning the reform of state-owned enterprises is rich in details, and what catches the eye is the part that promotes the capitalization of state property, developing the partnership of the two economic forms, strengthening the supervision and management of state property chiefly through the management of capital. 
With this exceptional measure, the Party Center has opened a new chapter, a new frontier, on the path toward Socialism with Chinese characteristics.  In the process of a new round of reform of the state economy, socialist elements have not retreated, but have been strengthened through the power of their control of capital.

The state economy controls the lifeblood of the national economy, like a national economic army that comes when it’s called and wins when it arrives.  Globally, it is the main force promoting the achievements of the state’s strategic objectives, but in times of crisis it is also the major force in meeting the crisis.  This is because a state-owned enterprise is not only an economic animal, but instead assumes its social responsibilities, and in times of need, can sacrifice the interests of the enterprise to those of the people and the society.

What is the best way to handle the weighty matter of public capital?  The core of the matter is to strengthen the vitality of the state economy by following the principles of the operation of capital, which means taming and making proper use of capital.  Rationalizing the overall arrangement of the state economy, further strengthening the vitality of the state-owned economy, expanding the control and influence of state capital in the realms of economics, society and culture, will allow the state-owned economy to truly become the economic basis for the protection of the people’s interest and the security of the state.

First, the state-owned economy has setbacks and makes progress, making up the strategic overall arrangement of new state capital. At present, state-owned enterprises continue to face many problems, the competitiveness of such enterprises remaining lower than it should be, and the overall organization of state property remains irrational.  Between 2001 and 2010, the average rate of return on net assets of all state-owned enterprises throughout the country was 5.4%.  Of the 124,000 state-owned enterprises recorded in the statistics of the State-Owned Assets Supervision and Administration Commission of the State Council in 2010, 35% were losing money.  In 2010, 70% of state-owned enterprises were still engaged in general production and in processing, business services, and other processing industries.  The capitalization of state-owned assets gives them liquidity, and allows them to retreat from ordinary or losing industries, and through the operation of capital they become linked to the interests of the country, if weakly. 

There are two basic areas in which to improve the distribution of state assets.  The first is to strengthen the state economy in its role as the main force assuring national security, including both traditional and non-traditional notions of state security (food security, resource security, information security, economic security).   The second is to strengthen the state economy in its role as the main force providing public service, achieving goals in areas such as energy conservation, ecological construction, and social guarantees.  By 2020, we should arrive at a situation where the distribution of state assets is reasonably divided between industries that are strategically important to the state and industries in general, in overall terms moving from the current 3:7 ratio to a 7:3 ratio. 

The second is the establishment of non-profit foundations, and the increase of the control and influence of state assets in the realm of non-profits.  At present, the strategic control of the country effected by the state economy is basically limited to the realm of the economy, but once the strategic transformation from assets to capital is accomplished, it will be possible to extend this control to the non-economic realm.  This is especially urgent because building a system of core socialist values and increasing China’s soft power are outstanding challenges we are facing.  Behind many seeming expressions of public opinion we find the manipulation of capital with very clear tendencies.
State-owned capital can be invested in non-profit foundations that will support strategic state interests.  Financing the activities of academic research, NGO organizations and news media in China and abroad will promote the building of superstructure and soft power consistent with China’s economic base.

Third is to enlarge the control and the influence of state capital over the information industry.  Following the rapid rise of new media and the mobile internet, information is already a vital industry in relation to state information security and ideological construction.  The state economy needs to strengthen its control and influence over the information industry through capitalization, especially in the context of internet portals and internet social networks.

Fourth is to promote integration with the non-state economy, increasing the leadership capacity of the state economy.  By developing a mixed ownership system 混合所有制, as well as joint operation and integration of the operations of state economy and the non-state economy, we can enlarge the leadership capacity of state capital.  As investments by state capital assume a larger role in all investments, this will enlarge the capacity of strategic leadership of the state economy in new strategic industries and in the ever-improving transformation of the economy.  In particular because the state economy is already the core strength of China’s global competitive strength, as well as the main force in implementing the strategy of “going global,” the blending of and mutual assistance between the state and non-state economies will push China’s enterprises toward a new collective rise.

Fifth is to strengthen the foundation of the state economy in order to increase the state’s ability to rule.  Behind China’s ability to achieve its goal of building a strong state and its strong crisis response, is an economic army that can be mobilized and commanded, and this army is made up of state-owned enterprises.  The new round of reforms of the state economy cannot weaken but instead should shore up the control capacity of the state over the state economy.  This would require that important industries related to state security be financed uniquely by state capital; in industries that are vital to the national economy the state must be the majority share-holder; in supporting industries 支柱性产业 the state must have a corresponding control of the shares.  If the development of mixed-ownership enterprises without state assets is necessary for the realization of important strategic goals of the country, it is not necessary that the shares be controlled by the state, but the founder of the enterprise must possess Golden Shares,[22] granting him veto power over any basic change to the company.

Comrade Xi Jinping pointed out:  We not only need to enlarge the “cake,” we must also distribute it properly.  The state economy remains the economic basis of the path China is steadily following toward common prosperity.  In a society in which capital enjoys a dominant position, the tendency for the gap between rich and poor to continue to grow is like the tendency for a material object to fall due to the force of gravity.  Secondary distribution by the government cannot  blunt this tendency, and the basic solution is increase the proportion of the public ownership of the means of production, so that the people become the biggest capitalists, and the state becomes the biggest CEO.

First, the profits produced by state-owned enterprises are enjoyed by all of the people.  The Third Meeting of the Central Committee proposed that by 2020, state assets should turn over 30% of their income to the state, to be used increasingly on social guarantees and improving the people’s livelihoods.

Next, the state economy will become an important source of funding for the society of the Chinese people.[23]  This will allow the state economy to fill the hole in China’s pension funds, thus resolving a future social guarantee problem for a population of one billion, particularly for the elderly.  From a deeper perspective, it will serve as an important channel for the public ownership of the means of production within socialism.

Finally, encouraging workers to hold shares is also an important path toward creating common wealth and reducing the income gap between labor and capital.  The “Decision” of the Third Central Committee Meeting of the 18th NPC  pointed out that “workers in enterprises practicing mixed ownership will be allowed to hold shares.”  Allowing workers to become owners is in fact an important means allowing workers to once again become masters in the new era, and to destroy the antagonistic relationship between labor and capital, “creating an interest community composed of capitalists and workers.”  This could also become an important economic foundation encouraging economic democracy within enterprises.

c.  Platform-Type Local Governments

As Comrade Xi Jinping said:  Many people’s bodies have entered the 21st century, while their minds remain in the 20th.  Many people view the relationship between the government and the market through the lenses of old 20th century theory.

As we enter the 21st century, we need to view the relationship between government and enterprises from a new perspective.  As Alibaba CEO Jack Ma 马云 has said:  China is the best commercial model in the world.  A great deal of Taobao’s 淘寶 [the Chinese equivalent of Amazon] success derives from the fact that it played the role of a government in the virtual world.  Put another way, the world’s best political model is an enterprise.  A country must be like a successful enterprise, able to respond to fierce competition and the uncertainly of the external world.  Officials are not those who rule the country, but rather those who run the country, through the spirit of innovation and efficient policy-making designed to create great wealth for society.

There are two types of enterprises, one makes products and the other makes platforms.  Weixin is a classic platform, in that it does not provide products for mass consumption, but instead furnishes a platform for the exchange of information and commodities between the public, Weixin users, and merchants.

Providing media that allow commodity-producing enterprises to realize their goals of increasing their value and their interaction is the great value of platform-based enterprises.  This is the explanation of the success of Weixin and Taobao.

The 21st century is the century of value-creating platforms.  From this perspective, it is not hard to understand that the miracle of China’s economic growth is inseparable from the role of local government.  For how many years have we been saying of local governments that “the government sets the stage and enterprises sing the opera 政府塔台，企业唱戏,” which surely just another way of saying that the role local governments play is that of a “platform-based enterprise.”  It is truly on the foundation of platforms built by local governments that enterprises carry out value-creation and self-growth.

Infrastructure platforms.  In the absence of basic infrastructure platforms like water, electricity, roads and mail service, enterprises cannot carry out activities of production and exchange.  The more complete and modern the infrastructure platform is, the more it can save costs to the enterprise in terms of production and exchange, allowing the enterprise to create greater value.

Industry chain and supply chain platforms.  A great function of platform-based enterprises is that they provide value-preservation for industry and supply chains.  The industrial park construction and construction of supporting industries, the organization of business meetings and talent-supply and -demand meetings, all of which have been growing like wildfire at the level of local governments, are platforms providing value-protection from industry chains and supply chains.  This is the means by which different enterprises in the same industry chain engage in dialogue and linking up, carrying out value creation and growth.

Stability expectations platforms.  No doubt about it, decision-making in a market economy is decision-making by scattered individual enterprises.  But enterprise managers are like everyone else, in that they make decisions on the basis of limited knowledge.  In carrying out investments and making decisions about production, they need to reduce uncertainty.  When local governments provide forecasts concerning the future prospects of the local economy, this reduces uncertainty, and thus provides a stability expectations platform for enterprises participating in the local economy.

China has more than 330 prefectural-level governments, more than 2800 county-level governments, as well as more than 40,000 equivalents at the township level, which constitute the “platform-based enterprise” of China’s huge governmental system.  They are the “operators 操盘手” of Chinese economic activity, they compete with one another, learn from one another , sometimes join forces through land development, industrial planning, industrial park construction, investment-seeking, and project-promotion to continually develop industry, build platforms for enterprises, stimulating the take-off of China’s economy. 

As Steven Ng-Sheong Cheung 张五常[24] has pointed out, competition between local governments is real market competition.  The search for capital investment is the market competition between these “platform-based enterprises,” and it is precisely through this competition that local governments finally provide superior conditions and services to enterprises.

The competition between local governments has already transcended the cut-throat competition to offer land at low cost, and what is more important now is the competition in terms of an “innovative commercial model.”  For example, how does Chongqing, a mountainous city in the West, compete with coastal cities in the East to attract enterprises in the electronics industry?  Obviously, the Eastern coastal cities already have developed a mature “commercial model” of a “platform-based enterprise”—the “both ends on the outside” model in which they make use of their maritime advantage to import raw materials from abroad and sell to markets abroad.

Of course, with the rise of prices across the board, industry’s move toward Western China has become the dominant trend.  But this is not a “natural” occurrence, and who is going to divide up the cake?  This requires the innovation of enterprise managers within the government.  The Chongqing municipal government innovated with its “one end in China, one end outside” model. 

Exporting goods abroad requires overcoming Chongqing’s disadvantage in terms of the availability of maritime shipping lanes, but the construction of the Chongqing-Xinjiang-Europe Railway facilitated shipping by sea and by land and reduced logistics costs.  At the same time, the “one end in China” fully exploited local advantages in terms of resources and man-power, especially the fact that migrant laborers from Chongqing working in Chongqing could benefit from much better public welfare, and at the same time avoid all the time wasted coming back from their jobs a great distance away for New Year’s and other holidays, thus saving labor costs.  Chongqing’s “commercial model” is already a success.  Chongqing’s Liangjiang New Area is already one of China’s most important industrial bases for the electronics industry, and the concentration of notebook computer industries can already produce 40,000,000 notebooks a year.  This is a classic example of innovation by a local government acting as a platform-based enterprise.

It might be helpful to provide one more small example.  Twenty years ago, no one could have predicted that the otherwise unremarkable “Sha county snacks 沙县小吃” would become a big industry.  Who could have predicted that roadside stands selling “peanut-butter noodles 拌面扁肉” would catch on throughout China and then go abroad, so that “where ever there are cities, there are Sha county small dishes.” 

In fact, behind these Sha county snacks, growing like weeds, we see the nurture of the skillful planning of the government.  There are 55,000 people outside of Sha county working the Sha county snack industry, or seven out of every ten villagers.  Many peasants have no technical knowledge and no capital, so how do they participate in a very uncertain market?  These peasants, who have only just put down their hoes, rely on the government to get up to speed; the government runs training classes, even in areas outside of Sha county where the snack shops are set up, the government also provides certain subsidies to those who set up shop, and if they need a loan, the Sha county government can help each family shop to obtain 30,000 to 50,000 RMB locally. 

The government is also responsible for the management of the Sha county brand, and promotes a standard economic model.  The government changed the rag-tag, sporadic nature of peasant market behavior into the organized, modern management of a group company.  This is how the Party organizes the peasants to develop the economy in the new era, a new mode of villages surrounding the cities, following the strategy “each village sends a team to a particular city, each village organizes the Sha county enterprises in that city.”  So this is part of the Sha county strategy.       

The right to allocate land is the Archimedes fulcrum of the platform-based enterprise function of local governments.  Compared to other developing countries, since the founding of New China and especially since the beginning of reform and opening, an important institutional basis for China’s rapid economic growth was the realization of land reform, which gave the land to the state and to the collective, the greatest institutional legacy achieved through the sacrifice of countless revolutionary martyrs. 

The process of New China’s development that that of a transition from a traditional rural society to a modern urban society, a process involving huge movements of people, great changes in industry, and great destruction and construction in the cities.  Land reform more or less completed the process of the transfer of land on an institutional level, providing the only foundation on which new construction could be carried out.  Because developing countries like India, Brazil, and Venezuela did not complete this process, they had great difficulty carrying out large-scale urbanization and building basic infrastructure.

Nationalizing or collectivizing land, minerals, and resources that are strategic to economic development serves basically to provide a public platform for public interests, avoiding that these public interests be kidnapped by private interests, resulting in the “tragedy of the anticommons.”[26]  The most direct advantage of this is that infrastructure construction can be much more efficient, something on which Western countries fall far behind. 

In November of 2013, London mayor Boris Johnson took a ride on China’s high-speed train, and after returning to England, wrote an article in the Daily Post in which he said with great feeling:   How long did it take to build this 813-mile long high-speed railway between Beijing and Shanghai, with its new marble stations along the way and its spacious arrival halls?  Two years!  Friends, two years!  This is the same amount of time that we spent arguing about the Number 2 Line, two years during which we spent million pounds on design and consultation, and the railway is not yet built.

The prosperity produced by this kind of platform-based enterprise requires government officials with enterprising spirits who continually innovate, negotiate, and move things forward.  Cultivating this enterprising spirit among government officials requires a tolerant atmosphere, because innovation means taking risks, it means having the courage to “dare.”  If we suppress the activism of local governments and limit their activities, then these platform-based enterprises will lose their power.  In an environment where “doing things might cause problems,” these government entrepreneurs will lose their pioneering spirit and be unable to innovate.

Is this not what local governments are like?  If we can understand local governments as platform-based enterprises that serve as an important node in the Chinese economy’s value-creation, and not as a force that interferes in the economy, then it is not hard to understand that if ever these platform-based enterprises lose their power to innovate, then entrepreneurial economy activity will lose the platform it relies on, becoming an important factor in the decline of China’s economic growth.

Of course, the biggest problem with local government as a platform-based enterprise is the identity conflict that comes from being both a unit of government and a player in a competitive market.  This is why we see problems like rapid over-construction, excess investment, local over-indebtedness, political achievement projects 政绩工程, environmental destruction, and the spread of pornography, gambling, and drugs, but it is not the case that the more resources are in the hands of local governments, the more interference there is in local economies. 

For this reason, the model of local government as platform-based enterprise should not be rejected, but should rather climb the ranks of the government structure, from the base level of competition over costs to the higher-level competition over innovation, from a simple competition for the fastest speed of development to a multi-faceted competition over scientific development, from disorderly competition to competition focusing on procedures and norms. 

The keys to the transformation of the capacity of local government lie in strengthening financial discipline, which will transform the budget constraints of local government from the soft constraints of administration to the hard constraints of the market, and in carrying out different types of assessments, so that areas displaying strong economic development but with important environmental concerns will be assessed less on economics and more on social responsibility.

It cannot be denied that, in the process of stimulating local economic growth, many local officials look for rent-seeking opportunties, hook up with evil businessmen, and engage in serious corruption.  This is a problem at another level, and requires doing what the new Central Committee has done, which has been to tackle the problem through the two initiatives of mass line education and the struggle against corruption, but we shouldn’t throw out the baby with the bathwater [literally, give up eating for fear of coughing 因噎废食], and deny the great role played by local governments functioning as platform-based enterprises.

d.  A Country Devoted to the Popular Livelihood

Devotion to the  people’s livelihood has been the mark of good government in China from ancient times.  The important features of the world of great harmony imagined in the Liji relate to resolving problems of income, marriage, and employment for the common people, and especially for the poor and the weak. 

Sun Yat-sen said:  “The people’s livelihood means the lives of the people, meaning the existence of society, the way citizens make a living, the fate of the people.”[27] 

The Report of the 18th NPC pointed out:  “We should bring as much benefit as possible to the people, resolve as many difficulties as possible for them, and solve the most pressing and real problems of the greatest concern to them. We should keep making progress in ensuring that all the people enjoy their rights to education, employment, medical and old-age care, and housing so that they will lead a better life.”[28]

Research illustrates that in Asian people’s understanding of government and democracy, the most important thing is the resolution of questions involving the people’s livelihood, as the percentage of Asian people holding this view is as high as 54.7%, and in China it is 67.1%, much higher than for other features of democracy such as elections or the right to criticize. 

Solving problems of the people’s livelihood has become the alpha and omega for the governance practiced by the Chinese government.  For example, putting the people’s concerns first is an outstanding feature of the 12th Five Year Plan.  It first raised the quantitative goal of rapidly increasing household income, demanding that the rate of increase of the disposable income of urban residents, and of the net income of rural residents, be higher than 7%, not only higher that the 5% growth rate fixed by the Five Year Plan, but also higher than the growth rate of the GDP. 

In addition, the Plan clearly upholds guaranteeing and improving popular livelihood as the basic beginning and end points of the developmental model for accelerating the economic transition.  Third, the Plan places public welfare in a prominent position, and places solving the problems of public welfare that are of most concern to the people, such as employment, income distribution, medical care and public health, and housing security, in an even more prominent position.  This provides clear responses to the most pressing and urgent social questions.  Fourth, the Plan particularly points out that it is including the ten-point plan of action to improve the people’s livelihood. 

In the past few years a “new leap forward” has occurred in Chinese social policy, in which a system providing medical care and old-age insurance for all of China’s villagers has been constructed out of practically nothing,  and with the construction of this basic social safety net, there has been a drastic decline in poverty rates, a rapid increase in universal education and levels of health, and the proportion of expenditures on popular livelihood has greatly increased.  This is society protecting itself from and reacting again the diffusion of the logic of capital, which results in the logic of capital being embedded in a social ethics.

China is no longer a country of low social welfare.  In the future we will call it a country of the people’s livelihood, an important aspect of the special characteristics of socialism, which has two important functions distinguishing it from a welfare country:  one is the function of social guarantees, protecting the weakest from market competition and guaranteeing basic survival needs; the second is the function of stimulating economic efficiency, meaning that by widely developing human capital, we will stimulate the ability of the people to compete in the market economy, thus promoting economic development and social equity.

Sun Yat-sen argued that: “The people’s livelihood is the people’s life.  This is a social question, so an ideology based on the people’s livelihood 民生主义 is socialism, or communism, and can also be called utopianism 大同主义.”

​The meaning of socialism is a country grounded in the people’s livelihood.  The reason that China can resolve the people’s problems is because in socialist countries, public capital occupies the place of pride.  As Sun Yat-sen argued:  not only must we control private capital, we must also develop it, and everything of a monopolistic nature, or that exceeds the ability of private individuals to manage it, must be managed by the state, so that the system of private capital cannot manipulate the lives of the citizens.

A state based on the people’s livelihood is a middle way between the welfare state and the competitive marketplace.  It ensures that social protection and market competition stimulate one another rather than rejecting one another.  The trap into which welfare states fall is that of continually rising welfare, when the people’s expectations exceed the state’s capacities.  China has vast amounts of public capital, offering a second source of finance for a state based on the people’s livelihood; at the same time, as policies based on the people’s livelihood have increased the productivity of society as a whole, China avoids falling into the “trap of the welfare state” that encourages laziness.
 
4.  The Advanced Stage of Socialism:  A Socialism that Rides Herd on Capital

In the 1980s, in order to break through the constraints on a stagnant ideology and make a scientific judgement of the developmental stage where China found herself, the 13th Party Congress, held in 1987, formally issued its strategic judgement that China was in the early stages of socialism.  Comparing today’s situation with that of 20 some years ago, China’s economy and society have experienced great changes, yet China’s basic national situation of being in the early stage of socialism has not changed.

The question is, how long will the early stage of socialism last?  Is China’s next step to follow the sequence and enter into the middle stage of socialism, and then finally head toward communism?  Or rather will it be as some people hope, after flirting with socialism, China will turn and enter into the advanced stage of capitalism?

The Report of the 18th Party Congress points out that:  China “will neither take the old road of closure and stagnation, nor will it take the heterodox road of changing its banner.”  The road China will follow is a new road of a socialism that the world has never known.

After 2020, when China will have smoothly realized the goal of building an all around moderately prosperous society, and entered the ranks of high income countries, and when the size of the economy has caught up with and surpassed that of the United States, questions of common properity will then be more important than questions of economic efficiency, and China should at that point consider the question of the transition from the early stage of socialism to the middle stage of socialism.

Arriving at the middle stage of socialism with Chinese characteristics, we will have achieved a new model of socialism that will have absorbed the advantages of capitalism, and will be a new form of society capable of providing freedom and union, efficiency and fairness.  We might call it a “socialism that has tamed capital.”

Marxism’s basic insight that relations of production must accord with social forces of production is undoubtedly true.  Yet the public ownership system of the means of production of classical socialism is not the only possibility in terms of the correspondence of the relations of production and the social forces of production.

The new form of the public ownership of the means of production in the 21st century requires socializing capital, knowledge, labor, and other important productive ingredients, fundamentally destroying the private monopoly over capital, destroying capital’s practice of hiring knowledge and labor.  Public and socialized capital will dominate, and the production, circulation and use of knowledge will benefit all of society to a much greater degree, and the agency of the workers will achieve a genuine liberation, all of which will serve as a new foundation for the achievement of advanced socialism.

Capital is a weapon in the advance of the civilization of humanity.  Capital should serve the people, and not the other way around.  All socialism does it to take the upside-down logic of capitalism and put it right again.

a.  “The Socialization of Capital”

The basic economic system of socialism in its middle and advanced stages should be a mixed economic system where the public economy plays a dominant role.  This mixed economic system has proven to be more efficient than the Western market economy, and since this efficiency carries out the socialization of capital through its mixed nature, it better responds to the needs of large-scale production. 

According to the calculations of Li Yang 李扬 and others, in 2011, China’s total social assets totaled 547 trillion RMB, of which sovereign assets came to 163.3 trillion RMB, or less than one third.  Of these, state-owned assets numbered 81.4 trillion RMB, land and resource assets 52 trillion RMB, reserves 21 trillion RMB, state-owned assets held by administrative units 8.8 trillion RMB, government savings in the Central Bank 2.3 trillion RMB, and state-owned assets in the form of foundations dedicated to social protection, 0.8 trillion RMB.[29]

In the future, if the ratio of sovereign assets is increased, together with the ratio of socialized assets, so that the two together make up two-thirds of total social assets, this will constitute a new form of public-ownership socialism, and will lay the basic economic foundation for the creation of shared wealth.

With the increasing separation of ownership rights and management rights, and with the thorough-going merging of different types of capital, we create a world in which “I am in you, and you are in me 你中有我，我中有你.” 

The economic basis of socialism is public ownership.  The economic basis of socialism in its middle and advanced stages is one in which public ownership and social capital play dominant roles.  Socialism in its middle and advanced stages will be composed of the following types of economic units—state capital, collective capital, cooperative capital, social capital, micro-capital 小微资本, private capital, and foreign capital—and their distribution should be as follows.

The foundation of the most important public system is the state-capital economy.  At present, sovereign capital makes up almost one third of total social capital, part of which is state capital owned by the people as a whole and publically managed, and another part is made up of strategic resources, publically owned by all the people, such as land, minerals, the environment, ocean waters, etc.  These make up our country’s greatest wealth, the foundation of the life of our billion plus population.  Developing socialism means boldly enlarging and strengthening state capital, further increasing its percentage as a part of total social capital, and continually ensuring that the profits made by state capital be enjoyed by all the people.

The collective-capital economy is also an important base of the public system.  The important different between socialist industrialization and historical examples of capitalist industrialization is that in instances of socialist industrialization, there occurred no large scale movement of land enclosure transforming peasants into a penniless proletariat, and instead the peasants were transformed into a propertied class with shares in collective enterprises. 

In the period of reform and opening, Town and Village Enterprises sprouted like mushrooms, and the collective economy played an important role in these developments.  In 2013, the collective economy made up roughly 7.3% of the proportion of the total assets of industries above a designated size.  Since the Third Central Committee Plenary Meeting of the 18th NPC, the modernization of agriculture and the industrialization of villages has accelerated, and with the spread of the reforms separating land rights, contracting rights, and management rights, and the advance of the reform of the share-holding system in the collective economy, the importance of the collective economy has been enhanced, which means that peasants will possess even more capital.

The cooperative-capital economy has become an important form through which workers can own enterprises, allowing workers in the enterprise to become its collective owners.  Huawei is a classic successful example of this.  One third of the people in the world use Huawei’s communications technology on a daily basis.  In 2013, Huawei surpassed Erikson, and its increasing revenue propelled it into a position of world dominance of the telecommunications industry.  Huawei handles 50.3% of 4G telecommunications in Europe, and supplies 25.9% of telecommunications equipment in Africa. 

The success of Huawei, where workers hold 98.6% of the shares,[30] is proof of the team spirit 向心力 of 150,000 Huagong workers, and of the enterprise’s idea of “to live we must all live together 要活一起活,” have turned these 150,000 workers into a “team” who share the same fate as Huawei chairman Ren Zhengfei 任正非 (b. 1944).  Ren Zhengfei employs a bonus system unheard of in the history of Chinese industry, in which 98.6% of shares belong to the workers and only 1.6% to Ren himself.  Huawei shares are not traded on the market, the workers’ shares cannot be sold, nor do they have rights to make decisions, but they are part of the bonus system.  The workers’ salary and bonus are a combination of  “wages (basic work) + bonuses (when teams or individuals surpass basic work) + dividends (overall company profits).”  This system of salary and bonuses combines competition and cooperation, meaning that workers are employees that maximize individual benefits, team members who work together, as well as “capitalists” who are invested in the enterprise.

Cooperative enterprises and partnerships are becoming an important trend.  With the development of a new round of rural reforms, new agricultural cooperatives will become an important economic form of large-scale agricultural operations.  As of January 2014, there were 10,190,000 families enrolled in Farmers' Professional Cooperatives, and once we enter into the stage of middle or advanced socialism, the numbers of cooperatives as well as the scale of cooperation will both be enhanced.

Another point is the widespread rise of knowledge-based partnerships.  The most important resources in a knowledge-based enterprise is the specialized knowledge possessed by enterprise members, and not capital, which is why they are organized as partnerships, a classic example of which are legal services.  In the future, we will see an important rise in partnerships formed by lawyers, accountants, consultants, and others. 

An economy of social capital is an important path toward a world where workers possess the means of production.  In the future, pension capital will become an important channel through which Chinese socialism carries out the public ownership of the means of production.  Years ago, Peter F. Drucker predicted that if the mark of socialism is the workers’ ownership of the means of production, then the United States could become the world’s first truly socialist country through pension funds’ purchase of shares.[31]  Only part of Drucker’s prediction came true, in that by 2005, American pension funds owned 40.7% of equity capital.  Japanese government pension funds also hold assets of 1.2 trillion US$. 

By improving the financial market, China can promote the entry of social insurance funds into the market, transfer state-owned assets, and raise social funds amounting to a social insurance fund of the magnitude of ten trillion RMB, which in the future could easily control thirty percent of market shares, becoming an important path by which China creates a system of public ownership of the means of production.

A micro-capitalist economy is an economy where workers and capital collaborate.  Following trends in the socialization of wealth, and the decentralization of resources, a new kind of social current is emerging—the large scale emergence of small-scale collaborative economies.  This “loser economy” has already developed from partnership-based roadside stalls to partnership-based stores opened on Taobao.  The nature of this economy is an economy where everyone gets rich, and has already become a vital force in China’s economy. 

The dawn of the micro-economy has already arrived.  As the path opens up, and as the cost of information exchange and material exchange declines, many things which in the past could only be carried out through enterprise organization will be achieved through decentralized market exchange, and will become very competitive.  More and more people may choose to participate in economic activity through autonomous self-employment or self-creation of enterprises.

In sum, the socialization of capital is not the same as the socialization of assets in developed capitalist countries, but means instead making capital socialist.  Socialism does not destroy capital, nor does it demand equality between rich and poor, but instead wants to truly create the conditions of “land to the tiller, capital to the worker,” fundamentally eradicating the antagonism between capital and labor, and realizing the union of labor and capital.

b.  The Liberation of the “Agency” of Labor

In the middle and advanced stages of socialism, people’s agency will achieve a new liberation.  Why have workers lost their agency?  Marx put it very clearly, arguing that the basic reason is that while workers have nothing, and can survive only by selling their labor, those with property achieve a superior position in society:  “The one who originally had money, now the capitalist, advances, head held high; the one who had labor is now the capitalist’s worker, trailing behind.  One is happy and alive, the other is full of fear and trepidation, cowering, as if he had sold his skin on the marketplace and has only one future, to let someone tan it.”[32]

Are these remarks, bitterly uttered by Marx more than a century ago, now obsolete?  While our society’s “elite” glows with happiness and relishes an unprecedented prosperity, are not China’s laboring masses still in constant danger of losing their rice bowls, trembling as they work as if their life depending on it?  Xu Lizhi 许立志 (1990-2014), the worker-poet who put an end to his young life by jumping from a tall building in October of 2014 put it like this:  “Amidst the crashing sounds, hundreds of thousands of working boys and working girls, bury, with their own hands, the best years of their youth on assembly lines.”  “The red flag roused the serf, halberd in hand, While the despot's black talons held his whip aloft.”[33]   Were we to go the cemetery and ask the people’s heroes who long since died for the dignity of the laboring masses, would tears not run down their cheeks?

The sole source of income for the great mass of people who are the owners of labor is their wages.  Yet according to market principles, the wages paid by the employer basically equal the living expenses of the worker and his family, and the class of ordinary wage owners lives day to day, and even the well-paid white collar class is the “cool crowd” that counts its pennies 精打细算的”酷抠族.”  A fair number of workers are in fact “moonlighters 月光族,” who, even if they scrimp and save their whole lives will might be able to put together enough to buy a house, but this would be simply their biggest expense and not an investment.  The majority of the people will never have the extra capital that would let them breathe easy, and for them life is just an endless, exhausting cycle of work and spend.

When will such servitude 苦役 come to an end?  It will come to the end when we achieve the financial freedom of the individual, meaning that the individual can balance income and expenses without engaging in constant labor; for developed capitalist countries, this is a goal achieved only by a small elite within society.  A competitive socialist system can, through the effective use of social institutions, bring the common masses to this point, which means affirming the basic agency of the workers.  This will be a genuine liberation of the workers from slavery and alienation. 

Mid- or advanced-level socialism will be a society in which the common masses will be liberated from the ceaseless struggle for existence, which of course means that basic needs can be satisfied without the need for bitter labor, and lives will not be limited to material pleasures.  The fundamental characteristic of this society will be, as James Meade, Nobel Prize winner in Economics, put it:  “People can choose their own work, and work that not very interesting but has to be done will merit high wages, while at the other end of society if there are people who want to engage in activities with little commercial value, then they will have to lower their expectations, which does not mean starving in an attic.”  “No individual’s part of the total wealth of society will be too big or too small; most of every citizen’s income will be drawn from the general wealth.”  “The labor component in overall income will greatly diminish.”[34]

Poverty is not socialism, and socialism does not want to overturn capitalism, but instead wants to turn everyone into “capitalists.”  The goal of restoring agency to the working people is to allow all people to join the propertied classes, where most of an individual’s income derives from the wealth of society.  Once individual financial freedom is achieved, not only will it no longer be necessary to sell one’s labor, but basic existence can also be secured. 

When the common masses rely on social wealth for their income, their lives will be free from worries about food and clothing.  When the workers, as owners, receive dividends from public assets, these will include not only income from state-owned and collective-owned assets, but also income from all public capital such as land, minerals, and maritime wealth.  Income from social wealth is mainly income from pension funds, an income that provides basic social guarantees, allowing individuals to avoid the threats of illness and old age.

The well-known New Left Professor Cui Zhiyuan 崔之元 (b. 1963) believes that China’s future direction of development is toward “liberal socialism.”  This kind of liberty is not abstract liberty, but rather the concrete liberty belonging to the workers.  Socialism does not aim for the destruction of capital, but uses and tames capital.  Socialism does not aim to destroy capitalists, but rather aims to allow everyone to become a bigger or smaller capitalist, which will fundamentally change the economic antagonism between the working and bourgeois classes, so that the agency of the workers will be genuinely affirmed. 

This is not a society where we will pass our days sleeping in the sun, and it will remain a society of intense competition and dynamism.  It is that the broad mass of workers—in most situations and most of the time—will no longer have to sell their labor to capitalists, but will sell it for themselves.  Workers will have truly obtained the freedom to use their own labor and to enjoy the fruits of that labor, and not the freedom to search for the buyer of their own “skin” on the marketplace.

Humanity is poised at the brink of a new industrial revolution, where the happy marriage of artificial intelligence and industry will produce revolutionary changes in techniques of production, of which the wide-scale use of robots already represents a surging new wave.  With this development, a great deal of low-tech, grinding work will be done by robots, so that our work will henceforth be more challenging and more interesting.  The core of our work will no longer be the repetitive accumulation of the efforts of machines, but rather a constant effort to adapt to new situations, a constant creation of innovative games.

The internet revolution has also helped to liberate workers from the power of bureaucracy.  The internet revolution will overturn traditional styles of organization, and Weberian bureaucratic organizations will be destroyed, to be replaced by collaborative platforms exploited by individuals and teams. 

The low cost of obtaining information and building websites means that the boundaries of traditional organizations will disappear.  People will be transformed from the cog in the wheel of the vast bureaucratic machine, becoming truly free people, a new “great step forward” in the history of the progress of mankind, and we will change from being “organization people” to being “internet people,” and those on different internets will make up a dispersed leagues of free people.

In history, it was only the idle aristocracy that enjoyed the right to spiritual self- realization, but in the mid- or advanced-level stage of socialism, this will be a right enjoyed by the common masses, and many people will throw themselves into projects they truly enjoy, society becoming a society of lifetime education and self-time self- realization, in a real sense.  The path of life will truly become a miraculous experience of self-discovery, self-creation, and self-realization.  This is a moment of awakening for mankind, and awakening from a life of numbing labor and drunken consumption.  This is not only modern version the citizen education of Plato’s ideal country or of the traditional Confucian social ideal of virtuous education.  We have already seen the embryo of this in certain Northern European countries with developed economies.  While these remain capitalist countries, they already contain important socialist elements.

c.  The Rise of Non-Material Labor

Another important characteristic of capitalism is that is has lifted mankind’s material production and consumption to an unprecedented position of centrality.  With the greater satisfaction of mankind’s material needs, people will increasingly devote more of their live to non-economic activities, and in such activities people are the collective creators and enjoyers of culture in which there is no need to engage in exchange, meaning that they will increasingly, naturally, display a socialist character. 

In a talk at Tsinghua University in 2004 entitled “Empire and Post-Socialist Politics,” the Italian philosopher Antonio Negri correctly pointed out the trend of our times, noting that:  “In the last decade of the 20th century, globalized industrial labor lost its hegemonic position, and what replaced it was ‘non-material labor,” meaning labor that creates non-material products and knowledge, information, exchange, relationships, and even emotional responses.  This kind of labor not only produces commodities, it also produces relationships and ultimately produces society itself.” 

Adopting Marx’s rational dissection of the ills of capitalist society, we can understand the profound economic and social significance contained in this change:  the logic of the superiority of capitalism will gradually give way to the logic of the superiority of socialism; labor will no longer be an alientated tool or medium in the commodity production, but will be the commodity itself; social relations will no longer an alienated appendage of the relations of production, but will themselves be the relations of production; or, to put it more directly, this society will from the outset be a socialist society.

Nan Huaijin 南怀瑾 (1918-2012)[35] once said:  “After several thousand years, Chinese culture necessarily produced communism and socialism, this was a necessary development.”  He also argued that:  “Chinese culture and thought believe that to solve the problem of inequality and stabilize society, economic problems must be solved through proper cultural politics.”

Mao Zedong once imagined that the form of organization of a socialist society would become a “big school:”

“In the absence of a world war, our army should be a big school. Even under conditions of the third world war, it can still serve as a big school. In addition to fighting the war, it must do other work. In the eight years of the second world war, did we not do just that in the anti-Japanese base areas? In this big school, the army should learn politics, military affairs, and culture, and engage in agricultural production. It can build up its own middle- and small-size workshops to produce goods for its own use and the exchange of other goods of equal value. It can take part in mass work, factory work, and rural socialist education. After socialist education, there are always other kinds of mass work for it to do, to unite the army and people as one. The army should also participate in the revolutionary struggle against capitalist culture. In this way, it carries out military-educational, military-agricultural, military-industrial, and military-civilian work. Naturally, [these kinds of work] should be properly coordinated and a distinction should be made between major and subsidiary work. A unit can select one or two from the agricultural, industrial, and civilian combination, but not all three. In this way, the tremendous power of several million soldiers will be felt.”[36]

With the arrival of the 21st century internet age and the learning society 学习型社会, Mao Zedong’s idea of society as a big school will become reality in the form of online-to-offline (020).  Learning-based organizations will replace production-based organizations as the basic social form, and life-long learning and life-long education will become the way of life of all members of society.  With the rise of mobile internet services, the original post-90s or post-00s internet users will become the users of 24-hour online social media, WeChat groups will become “internet communes,” Weibo will become the “people’s squares.”  Here we see the beginnings of the organizational form of internet socialism.

With the improvement of material life, the capitalist lifestyle revolving around economic activity will experience a great change.  Humanity will increasingly engage in activities unrelated to economic interests, or to put it in the language employed by economists, the relative value of leisure will increase, while leisure will no longer be seen as consumption but instead as labor that will satisfy mankind’s higher-order needs, such as book clubs, debate clubs, and cultural salons, and activities like these will occupy increasing amounts of people’s time.  There is no doubt that these activities are in themselves more socialist, and through their collective spiritual life, people will enhance their sustainability and stimulate their creativity.

Socialism is the only correct path for mankind to achieve comprehensive development, and even the continuous production of the most advanced capitalism gives us only Marcuse’s one-dimensional person, “a purely technical animal and a purely utilitarian animal,” a “deformed and alienated person.”  The social pathologies of capitalism finally reflect the pathologies of man’s spiritual life under capitalism.

Does this mean that the ideal form of life that Marx talked about will not come to pass?  “[Communist society] makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.”[37]  We predict that for this to occur we will have to wait much longer, for the arrival of communist society, but there is no doubt that in the society of middle- and advanced-stages of socialism, the lives of the workers will be extremely rich, the mechanical life of the cog in the machine forced to work for meager wages will be largely eradicated, finally entering the museum of history. 

5.  Entering the Great Harmony

Communism does not follow a schedule, nor is it something that can be measured in terms of the lives of one or two generations.   Nonetheless the ideal, harmonious world of “communism” is not unattainable, but is rather the future of mankind that is making its way toward us, and for the people of the 21st century it is a future that we can imagine and for which we can struggle.

Communism is not Huxley’s terroristic distopia, but is instead an association of truly liberated free people.  “All men within the four seas are brothers.”  That mankind enter the territory of great peace is consistent with human nature.  Mankind shares a single origin and there should be no distinctions of higher and lower, superior and inferior, distinctions of race, skin color, or geographic location.

The history of the progress of humanity is the process of the self-struggle, self-realization and self-liberation of his basic nature, the progress of mankind sloughing off exterior shackles and gradually achieving maturity.  If we say that the capitalist system rose together with the “individual,” who was liberated from the shackles of feudalism and given a limitless space of opportunity, all of which constituted a great liberation in terms of individual agency, then communism will mark the rise of “collective man,” and we will change from our present status as isolated, scattered atoms into “associations of free people,” which will be another great liberation in terms of human agency.  This will mark the return of man’s true nature in the rise of history, a new leap forward on the basis of the previous liberation, the self-realization of the fate of humanity.   Or as Marx said it in his German philosophical style:  “This is true ownership, realized through people, for people, and in terms of man’s basic nature.”[38]

The entire history of humanity is as clear as night and day.  Marx could not have been more accurate when he said that only under socialism will the through-going liberation and the collective spirit of mankind be realized.

“Within Communist society, the only society in which the genuine and free development of individuals ceases to be a mere phrase, this development is determined precisely by the connection of individuals, a connection which consists partly in the economic prerequisites and partly in the necessary solidarity of the free development of all, and finally, in the universal character of the activity of individuals on the basis of the existing productive forces.”[39]

It is not the eternal woman leading mankind ever forward, but instead the complete liberation of humanity as a whole, its complete development, itsfree association.  It is precisely through the fulfillment of this prophecy of self-realization that humanity will put an end to all of capitalism’s magic and this Faustian gamble win the prize of “earthly paradise.”

The cause of communism is magnificent, and possesses an inner harmony, it is a cause worth fighting for to the end!

The communist society of the “association of free human beings” must arrive!  The great world of harmony where “near and far, big and small, all-under-heaven are one,” and “all are equal, all are familiar” must arrive!  No one’s will can stop this.

In this great age of mobile internet, in this great age when losers are making history, allow us to proclaim:

“Workers of the world unite!  Losers of the world unite!”
 
Notes

[1] 骑在资本头上的社会主义.

[2] 鄢一龙, 白纲, 章永乐, 欧树军, 何健宇, 大道之行:  中国共产党与中国社会主义, (Beijing:  Renmin University, 2015, 2018).

[3] See Xu Jilin, “The Specter of Leviathan:  A Critique of Chinese Statism since 2000,” in Xu, Rethinking China’s Rise:  A Liberal Critique (2018), pp. 20-60.

[4] Immanuel Wallerstein, The Modern World System (Chinese translation).

[5] Karl Marx, The Communist Manifesto, translation taken from https://www.marxists.org/archive/marx/works/download/pdf/Manifesto.pdf.

[6] Ibid.

[7] Ibid.

[8] Joseph Schumpeter, Capitalism, Socialism, and Democracy, (Chinese translation).

[9] Friedrich Hayek, Individualism and Economic Order, (Chinese translation); Karl Polyani, Society and Economy, Selected Writings, (Chinese translation).

[10] Milton Friedman, “Market Mechanisms and Central Planning,” (Chinese translation).

[11] Karl Marx, Das Kapital, translation taken from  https://www.marxists.org/archive/marx/works/download/pdf/Capital-Volume-I.pdf, p. 451. 

[12] Translator’s note:  This is taken from a poem by Chen Liang 陈亮 (1143-1194), a poet from the Southern Song, entited 念奴娇·登多景楼.  The meaning is discussed below.

[13] “Loser” (屌丝 or 吊丝) is a popular internet term, generally referring to youth of modest origins and ordinary appearance, as opposed to the “Mr Perfects 高富帅”and the “Miss Perfects 白富美”.  The losers are the proletariat of the age of mobile internet, in the sense that they have no status, no money, no power, and no long-term prospects.  Yet losers possess a revolutionary spirit that can conquer the world, as well as a spirit of struggle and a spirit of self-mockery.

[14] Translator’s note:  “Moving bricks” originally referred to basic construction work, but in recent years has evolved into an internet slang expression used by white-collar workers or students to condemn the trivial nature of the employment available to them.

[15] Translator’s note:  “Hitting on Dad” is yet another internet expression meaning that many among the current generation of Chinese youth have no choice but to rely on their parents to establish themselves in life. 

[16] Joseph Stiglitz, The Price of Inequality, (Chinese translation).

[17] Vladimir Lenin, Marxism and Revisionism, (Chinese translation).

[18] Translator's note: The authors in fact cite excerpts from the poem, which is highly elliptical:  “危楼还望，叹此意、今古几人曾会？…凭却长江，管不到，河洛腥膻无际.”  I see no way to translate these lines in such a way as to render their meaning without a long footnote, so I decided to put the footnote in the text and the poem in the footnote.  A very helpful explanation of the poem is found here.  

[19] Translator’ note:  The authors provide a diagram, which we are unable to reproduce, in which the “market economy” is enclosed by a square, the four sides of which are identified as:  “top-level planning,” “public capital,” “platform-type local governments 平台型的地方政府,” and “a state based on popular livelihood 民生国家.”

[20] Translator’s note:  the “opposite shore 彼岸” was originally a Buddhist image of salvation.

[21] Translator’s note :  This is an example of what is sometimes called “Party formalism.”  It is obvious that the rhythms of political life in China cannot be this regular; the authors means to suggest, I suppose, a constant, regular attention to detail.

[22] Golden Shares are those which not only grant the holder power over ordinary shareholders, but which also grant him veto power over any behavior that could modify the enterprise’s charter.

[23] Translator’s note:  the “society of the Chinese people” is a concept developed earlier in this volume, and is meant to be a socialist version of the Western concept of “civil society.”

[24] Steven Cheung (b. 1935) is a well-known Hong Kong-born economist who spent more of his professional career in the US before returning to Hong Kong in the 1980s.  In the context of the text being translated, Cheung is best known for having introduced key concepts of the Chicago School of economics into China.

​[26] Michael A. Heller, "The Tragedy of the Anticommons: Property in the Transition from Marx to Markets,” (Chinese translation).

[27] Translator’s note:  People’s livelihood 民生 was one of Sun’s Three People’s Principles.

[28] Translation taken from http://www.china-embassy.org/eng/zt/18th_CPC_National_Congress_Eng/t992917.htm.

[29] See 李扬，中国国家资产负债表 2013, p. 37.

[30] Translator’s note.  Some Western observers dispute this characterization.  See https://www.nytimes.com/2019/04/25/technology/who-owns-huawei.html.

[31] Peter F. Drucker, The Pension Fund Revolution (Chinese translation).

[32] Karl Marx, Das Kapital vol. 1.  Translator’s note:  I could not find this passage in online editions, so this is my translation from the Chinese.

[33] Mao Zedong, “Shaoshan Revisited,” translation taken from https://socialistpublishing.files.wordpress.com/2010/05/maopoems-newsetting.pdf.

[34] James E. Meade, Liberty, Equality, and Efficiency (Chinese translation). 

[35] Translator’s note:  Nan Huaijin was an important teacher and spiritual leader, well-known throughout the Chinese speaking world.  Best known for his writings on Buddhism, Nan was broadly conversant with all of traditional Chinese thought.  On Nan, see Catherine Despeux, “The ‘New Clothes’ of Sainthood in China:  The Case of Nan Huaijin,” in David Ownby, Vincent Goossaert, and Ji Zhe, eds., Making Saints in Modern China, pp. 349-393.

[36] This is taken from Mao Zedong’s famous letter to Lin Biao, written on May 7, 1967, announcing what would eventually before the May Seventh Cadre Schools.  The authors in fact include only a somewhat cryptic excerpt of this paragraph in their text, without explanation, which would have required a major footnote in order for readers to understand.  I made the editorial decision to include a longer quote from Mao’s letter.  A translation of the entire letter is available online. 

[37] Karl Marx, The Critique of German Ideology.  Translation taken from  https://www.marxists.org/archive/marx/works/download/Marx_The_German_Ideology.pdf.

[38] Karl Marx, Economic and Philosophic Manuscripts of 1844.  Translator’s note:  I was unable to locate this quote in online versions of Marx’s work, so the translation is mine, from the Chinese.

​[39] Marx, The Critique of German Ideology.  Translation taken from  https://www.marxists.org/archive/marx/works/download/Marx_The_German_Ideology.pdf.