cpc
the Soviet Union had a profound impact on China’s thinking about political ideology, institutions and development.footnote1 The disastrous consequences for social welfare in Russia arising from the cpsu’s demise reinforced Beijing’s determination to resist external and internal pressure to move towards parliamentary democracy. Why did the Communist Party of the Soviet Union disintegrate while the Communist Party of China (cpc) was able to survive and strengthen its position? The dramatic divergence in the trajectories of the two Communist superpowers has been of incalculable significance for the global political economy of the twenty-first century, with effects potentially enduring far into the future.
The two regimes had a common point of departure in the political-economic system established in Russia in 1917–21. Its essential features—a monopoly of political control in the hands of the Party, state ownership of the means of production, state control over finance and trade—were devised during the extreme violence and struggle for survival of the fledgling Bolshevik regime during Russia’s civil war. When it was founded in 1921, the Communist Party of China adopted fundamentally the same political structure and the same approach to economic organization. As Xi Jinping put it in 2017: ‘The salvoes of the October Revolution brought Marxism-Leninism to China. In the scientific truth of Marxism-Leninism, Chinese progressives saw a solution to China’s problems.’footnote2
In both the ussr and China, civil war and the struggle for national survival against an invading power—respectively, Nazi Germany and Imperial Japan—reinforced the centralist, disciplinarian aspects of the Communist Party. In both countries, the period of the ‘New Economic Policy’—in the early 1920s, under Lenin, and the early 1950s, under Mao—temporarily modified the approach to economic strategy, but the philosophy of the ‘whole economy as a single factory’, including the organization of the rural population in collective farms, was quickly re-established as the key to economic organization on both sides of the Amur River. This ‘Stalinist’ economic system, alongside monolithic political control by the Party apparatus, persisted in China up to the death of Mao in 1976 and in Russia until the ascent of Gorbachev as General Secretary of the cpsu in 1985.
Polity of the tsars
However, the common features of the political-economic systems of the two Communist powers disguised profound differences in the nature of their pre-revolutionary regimes. For the cpsu, the ancien régime was the Russian state established from the seventeenth century onwards by the tiny Principality of Moscow through a long series of military conquests. This expansionist polity was ruled by a centralized, authoritarian government equipped with a huge army, necessary in the first instance to hold together a vast, sparsely populated and ethnically diverse territory with strong inbuilt fissiparous tendencies, and which was then tested in fierce struggles with neighbouring countries: the Great Northern Wars with the mighty Swedish state between 1700–21, the Napoleonic invasion of 1812, the Crimean War against France, Britain and the Ottoman Empire in the 1850s, the Russo-Japanese War of 1904. The First World War was the last and most devastating in a long series of conflicts between Imperial Russia and its great-power rivals.
In social terms, the upper reaches of the Tsarist military and civil service were staffed by a landlord class dependent on the sovereign for the allocation and protection of its holdings. This layer had been illiterate, by and large, through to the seventeenth century, as was most of the clergy. Russia had a negligible written tradition, with a minimal place for ethical or philosophical thinking about the role of the ruling class. The Orthodox Church was reduced to the position of a subordinate branch of the state, which appointed and paid its priests and high officials. The mass of peasants, foot soldiers for the army, were virtual slaves and remained subservient even after Emancipation in 1861. Although the country possessed a highly developed internal trading system, the merchant class was kept under tight control. The Tsarist regime established state monopolies for merchants, systematically taxed their profits to support the national treasury, and took care to prevent substantial commercial cities from materializing.
While an important part of Russian culture derived from interaction with the Eastern Mediterranean and Central Asia, from Peter the Great onwards the country’s rulers were above all concerned with absorbing the technologies and culture of Western Europe. This impulse was reflected in the architecture of St Petersburg, the adoption of the French language by the landholding upper classes and the orientation of the intellectual strata that emerged in the nineteenth century. This intelligentsia enthusiastically assimilated political ideas from Western Europe, and much of its literary and political activity was critical of Tsarist authoritarianism. The tension between the intelligentsia and the state would survive into the Soviet period. Capitalist industry grew between 1890 and 1914, but remained largely concentrated in St Petersburg and occupied a peripheral role in the overall political economy of Tsarism through to the eve of the Bolshevik takeover. The pre-revolutionary ruling class of landlords and military officers was preoccupied with exercising control over the Empire and the peasant masses. Its bureaucracy was relatively small. It had little understanding of the market economy and a deep sense of inferiority in relation to Western European culture.
The concept of a non-market economy based on common ownership of the means of production was central to the ideology of the Communist Party in the Soviet Union. It was implemented during the period of War Communism in 1918–21, and succeeded in throwing up a vast industrial bulwark that stopped the Nazi advance into Eurasia twenty years later.footnote3 However, once the cpsu leadership’s faith in communism evaporated, it lost its way completely. Faced with setting a course forward in new conditions, it had no conception of what the Chinese call ‘the other bank of the river’—the concrete situation it wished to attain. The only resources that Moscow’s pre-revolutionary history could offer were idealized visions of Western politics and free-market economics.
Resources for the journey
At the same time, the cpc could draw upon the deep resources of the Chinese ancien régime. In contrast to Muscovy—little more than a wooden fortress before the fourteenth century—for millennia the densely populated, economically developed core of the state in eastern China provided a firm foundation for long periods of stable political rule, even as control over thinly settled outer territories waxed and waned. The cpc was also bolstered by the long political-philosophical tradition of the Chinese bureaucracy, whose scholar-officials were systematically inculcated with a duty to ‘serve the people’ and with the moral requirement placed by Mencius upon those who ‘first attain understanding’.footnote4
This philosophy was deeply embedded in the thinking of the traditional bureaucracy and was equally ingrained in the ideology of the cpc. Yang Changji, Mao Zedong’s teacher in Changsha between 1913 and 1919 who ‘made the strongest impression’ on the future leader, believed fervently that scholars had a special duty to put the fate of the country above their individual desires.footnote5 ‘Serve the people’—wei renmin fuwu—has echoed, as a central call of the cpc, from Mao’s speech in September 1944, five years before the People’s Republic was proclaimed, to Xi’s collected addresses.footnote6 It need hardly be said that few, if any, bureaucrats throughout Chinese history have been able to meet the high standards of selflessness, courage and responsibility required of the ideal government official. Between 2012 and 2017, the cpc’s Central Commission for Disciplinary Inspection took action against 1.4 million Party members in order to contain the rampant corruption within the Party which had spread with the growth of the ‘market economy’, as it is known in China—most notably in the massive property-development sector.
The idea of a non-market economy, with common ownership of property, also has ancient origins in China, going back to the words attributed to Confucius in the Book of Rites, itself compiled from earlier texts in the second century bc. It is clear that Confucius had in mind an ideal world, in which benevolence is the guiding principle; but the nature of property rights in such a world is open to debate.footnote7 Indeed, the critical passage is ambiguous: da dao zhi xing ye, tian xia weigong. According to the Republican-era philosopher Feng Youlan, this sentence should be interpreted as: ‘When the Great Tao was in practice, the world was common to all.’footnote8 His contemporary, the Japanese scholar Tsuchida Kyoson, rendered it: ‘When the Great Way is realized, all the world will be in common possession.’
A generation earlier than Feng Youlan, the Utopian thinker Kang Youwei, a constitutional monarchist and leader of the 1898 Reform Movement, had proposed a similar reading of Confucius. In his Da Tong Shu [Book of Great Harmony], Kang portrayed a society in which ‘all industry will be publicly controlled’ and ‘all commerce will revert to the control of the ministry of commerce of the government’. Economic planning would be carried out on a world scale, so that ‘the evils of under- and over-production can be avoided’. In the countryside ‘all land will be publicly owned and operated’, while planning would extend to every detail, including work patterns, which would be executed ‘like military orders’.footnote9
Mao was thoroughly familiar with Da Tong Shu. He argued that the only way to achieve the ‘world of great harmony’ was through a people’s republic, led by the working class.footnote10 Many of the features of Da Tong Shu are similar to measures put into effect under Mao’s leadership between 1956 and 1976, in the teeth of fierce opposition within the cpc. Indeed the ideas of the ancien régime in China, stretching back to the pre-Qin world, figure far more frequently in Mao’s speeches and writings than do the ideas of Marx. TheCommunistManifesto had a tremendous impact on him and he also made great use of Marx’s writings on the Paris Commune and his Critique of the Gotha Programme. But apart from this, he does not appear to have made a systematic study of Marx’s writings. The implementation under Mao of an economic system that virtually eliminated the market may have owed more to the radical streams in the history of Chinese thought than it did to Capital.
New buildings, old foundations
From the mid 1950s until the late 1970s, the main body of property in China was held in common ownership of one form or another. In December 1978, at the beginning of the reform process, the cpc took the decision to leave ‘the Maoist shore’ of the river—the administratively controlled economy, with common ownership of property—and cross to the other side. The nature of the other shore was left unspecified at the time. However, as China embarked on this journey, the gradual development of the ‘market economy’ interacted with a reintegration of the older tradition of Chinese political and ideological thought.
China’s history as a state dates to the Qin Dynasty in the third century bc; its philosophical traditions go back to the Zhou Dynasty (eleventh century bc–221 bc). The ancien régime ‘foundations’ for the cpc include the long history of the Chinese bureaucracy, based on a sophisticated literary and philosophical tradition codified in the imperial examination system. Meeting the needs of the mass of the population was understood as a political-philosophical principle, and a key task for the bureaucracy was nurturing the market in order to achieve economic prosperity. This relationship was famously formulated by Guan Zhong (720–645 bc), the renowned chancellor of the State of Qi in the Spring and Autumn period of Chinese history. The text that bears his name argues that, with the market brought into full play, everyone could benefit; but the market alone should ‘not be allowed to decide the abundance or deficiency of commodities’. There is a ‘right way’ to go about this, which the Guan Zi calls ‘handling the market’.footnote11
Other schools of thought existed, but views such as those expounded at the Salt and Iron Conference of 81 bc, which advocated that China should return to a Golden Age of barter in which the population ‘lived contentedly and demanded little’, were rarely in the mainstream of government policy. Far from eliminating the market, the state persistently sought ways to enable it to function more effectively through pragmatic and intelligent regulation—organizing a wide array of public works, including water conservation and transport infrastructure; attempting to stabilize prices of key commodities; developing famine-alleviation schemes; supporting the spread of knowledge through encyclopaedias and other written texts.
Under this system, China was a world leader in market-driven innovation for two millennia. Its inventions included the equine harness, paper and printing, advanced metallurgy through the use of the blast furnace, porcelain, tubular metal weapons, gunpowder for military purposes, the maritime compass, the sternpost rudder, watertight ship compartments, and canal-lock gates. The key components of the steam engine, the double-acting piston and the conversion of rotary to rectilinear motion—the quintessential breakthrough of the British Industrial Revolution—were developed independently in China.footnote12 The Chinese intelligentsia formed the core of the bureaucratic system; working within it was perfectly compatible with severe criticism of the way in which officialdom operated, even though this rarely sought the overthrow of the system itself. During this long history, the state aimed to support the economy through undertaking key functions that the market was unable to deliver; the market was always subject to regulation by the philosophically guided state.
The approach followed by the Chinese leadership since 1978 has borne a legible relationship to this tradition. From the beginning of the reform process and ‘opening up’, Deng Xiaoping made clear that henceforth China should follow a pragmatic and experimental path regarding relations between state and market. The market should not be left to function without guidance, but the state should continuously ‘seek the truth from the facts’ in relation to their respective contributions to the economic system. In the immediate aftermath of the trauma of 4 June 1989, Jiang Zemin reiterated: ‘The extent, method and scope of combination between the planned economy and regulation through the market should be constantly adjusted and perfected in accordance with the actual situation.’footnote13 Within the political philosophy of the ancien régime, this pragmatic perspective suggests that the correct way to regulate the market involves a non-ideological search for balance and interaction between the yin of the ethically guided state and the yang of market competition. The famous passage in the Book of Rites can be regarded as a philosophical foundation for this approach. As Wu Guozheng suggested, it can be interpreted thus: ‘When the great principle prevails, the whole world is bent upon the common good.’footnote14
Alternative paths
There has been fierce debate in China in recent decades on the nature of the country’s history and intellectual traditions, both on their own terms and in relation to those of the West. The distinctive character of this discussion can be seen in the willingness of Chinese intellectuals, not least those within the cpc, to combine reflections on their own past with investigations into Western history and philosophy, to help clarify the outlines of ‘the other shore’. In this they were following in the steps of Mao, who famously wrote: ‘Use the past to serve the present, and use the foreign to serve China.’ Mao’s tutor, Yang Changji, was a pioneer in the effort to engage closely with Western intellectual traditions. In the work of Adam Smith, China’s current leaders discerned a similar concern with state-market relations. In The Wealth of Nations, Smith famously analysed the contribution of the invisible hand of market competition to social and economic progress in the West. However, both there and, above all, in his Theory of Moral Sentiments, he also argued that, left to itself, the market produces deeply problematic outcomes in terms of inequality, the nature of work, the achievement of happiness and the ethical foundations of society.
Since 1978, this philosophy has been incorporated into the outlook of the Chinese leadership, with the goal of integrating the ‘visible hand’ of government regulation and the ‘invisible hand’ of market competition, through a process of continuous experimentation with the method of combining the ‘snake’ of regulation and the ‘hedgehog’ of market competition. There have been innumerable difficulties along the way and no doubt there will be more to come. Nevertheless, China’s record during this period has been remarkable. Between 1980 and 2018, its share of global gdp rose from 2.3 to 18.5 per cent, while that of the eu shrank from 30.1 to 16.2 per cent.footnote15 China has nurtured a formidable group of state-owned enterprises as well as powerful non-state counterparts. The principal firms are in the process of becoming globally competitive companies, with world-leading technologies, brands and reputations. Economic growth has provided the basis for a tremendous advance in popular material and cultural welfare. The expansion of the country’s physical and social infrastructure systems—transport, electricity, telecommunications, water supply and sewage—has contributed to greatly improved living standards for the mass of the population. An enormous programme of housing construction has helped provide decent homes and personal security for the hugely increased number of city-dwellers. Expanded health and education provision has made a vital contribution to mass welfare.
China’s ‘national rejuvenation’ is intimately linked to its long history of simultaneously nurturing and regulating the market. It is not hard to see why the Chinese leadership would believe that this experience could make an important contribution towards a political philosophy of intelligent, pragmatic regulation for the global economic system, in the common interest, over the decades and even centuries ahead. The cpc’s programme of reform and opening up led many Western commentators to believe that the West would dominate China in the twenty-first century. These views were reinforced when China joined the wto in 2001, but they have proved to be an illusion. The way in which China engages with the West is still an open question. The degree to which it ‘absorbs the outside world’ [xishou wailai] as opposed to ‘integrating with the outside world’ [ronghe wailai] remains unresolved. The outcome depends not only on China but also on the West.
The radically different nature of the anciens régimes in China and in Russia is one key reason for the survival and prosperity of the cpc and the disintegration of the cpsu. This difference has become progressively more distinct as China has moved away from the policies of the Maoist era. In the years since 1978, the nature of the ‘other bank of the river’ has become increasingly clear. It is not the ‘common property-ism’ of ‘gongchan zhuyi’. Rather, the market plays a central role in stimulating the economy, while pragmatic state regulation, with the cpc at its core, aims to ensure that the market serves the needs of the whole population. Irrespective of whether property is privately owned, held in common by the state or by cooperatives, or under mixed ownership, it will be subject to regulation by the Party and the government in the common interest. In this view, ‘groping for stones to cross the river’ has gradually revealed a path of reform leading towards the other bank, which might be described as a form of da tong zhu yi—‘great harmony-ism’, or perhaps ‘great commonwealth-ism’—drawing upon the age-old Chinese notion of a meritocratic bureaucracy that regulates the economic system in the interests of the whole population. China still has far to go, with huge internal and external challenges. However, China’s leaders and the Chinese people have been able to see increasingly clearly the broad outlines of the ‘other bank’ in their collective search for a ‘Way’ in the midst of a turbulent world.
The two regimes had a common point of departure in the political-economic system established in Russia in 1917–21. Its essential features—a monopoly of political control in the hands of the Party, state ownership of the means of production, state control over finance and trade—were devised during the extreme violence and struggle for survival of the fledgling Bolshevik regime during Russia’s civil war. When it was founded in 1921, the Communist Party of China adopted fundamentally the same political structure and the same approach to economic organization. As Xi Jinping put it in 2017: ‘The salvoes of the October Revolution brought Marxism-Leninism to China. In the scientific truth of Marxism-Leninism, Chinese progressives saw a solution to China’s problems.’footnote2
In both the ussr and China, civil war and the struggle for national survival against an invading power—respectively, Nazi Germany and Imperial Japan—reinforced the centralist, disciplinarian aspects of the Communist Party. In both countries, the period of the ‘New Economic Policy’—in the early 1920s, under Lenin, and the early 1950s, under Mao—temporarily modified the approach to economic strategy, but the philosophy of the ‘whole economy as a single factory’, including the organization of the rural population in collective farms, was quickly re-established as the key to economic organization on both sides of the Amur River. This ‘Stalinist’ economic system, alongside monolithic political control by the Party apparatus, persisted in China up to the death of Mao in 1976 and in Russia until the ascent of Gorbachev as General Secretary of the cpsu in 1985.
Polity of the tsars
However, the common features of the political-economic systems of the two Communist powers disguised profound differences in the nature of their pre-revolutionary regimes. For the cpsu, the ancien régime was the Russian state established from the seventeenth century onwards by the tiny Principality of Moscow through a long series of military conquests. This expansionist polity was ruled by a centralized, authoritarian government equipped with a huge army, necessary in the first instance to hold together a vast, sparsely populated and ethnically diverse territory with strong inbuilt fissiparous tendencies, and which was then tested in fierce struggles with neighbouring countries: the Great Northern Wars with the mighty Swedish state between 1700–21, the Napoleonic invasion of 1812, the Crimean War against France, Britain and the Ottoman Empire in the 1850s, the Russo-Japanese War of 1904. The First World War was the last and most devastating in a long series of conflicts between Imperial Russia and its great-power rivals.
In social terms, the upper reaches of the Tsarist military and civil service were staffed by a landlord class dependent on the sovereign for the allocation and protection of its holdings. This layer had been illiterate, by and large, through to the seventeenth century, as was most of the clergy. Russia had a negligible written tradition, with a minimal place for ethical or philosophical thinking about the role of the ruling class. The Orthodox Church was reduced to the position of a subordinate branch of the state, which appointed and paid its priests and high officials. The mass of peasants, foot soldiers for the army, were virtual slaves and remained subservient even after Emancipation in 1861. Although the country possessed a highly developed internal trading system, the merchant class was kept under tight control. The Tsarist regime established state monopolies for merchants, systematically taxed their profits to support the national treasury, and took care to prevent substantial commercial cities from materializing.
While an important part of Russian culture derived from interaction with the Eastern Mediterranean and Central Asia, from Peter the Great onwards the country’s rulers were above all concerned with absorbing the technologies and culture of Western Europe. This impulse was reflected in the architecture of St Petersburg, the adoption of the French language by the landholding upper classes and the orientation of the intellectual strata that emerged in the nineteenth century. This intelligentsia enthusiastically assimilated political ideas from Western Europe, and much of its literary and political activity was critical of Tsarist authoritarianism. The tension between the intelligentsia and the state would survive into the Soviet period. Capitalist industry grew between 1890 and 1914, but remained largely concentrated in St Petersburg and occupied a peripheral role in the overall political economy of Tsarism through to the eve of the Bolshevik takeover. The pre-revolutionary ruling class of landlords and military officers was preoccupied with exercising control over the Empire and the peasant masses. Its bureaucracy was relatively small. It had little understanding of the market economy and a deep sense of inferiority in relation to Western European culture.
The concept of a non-market economy based on common ownership of the means of production was central to the ideology of the Communist Party in the Soviet Union. It was implemented during the period of War Communism in 1918–21, and succeeded in throwing up a vast industrial bulwark that stopped the Nazi advance into Eurasia twenty years later.footnote3 However, once the cpsu leadership’s faith in communism evaporated, it lost its way completely. Faced with setting a course forward in new conditions, it had no conception of what the Chinese call ‘the other bank of the river’—the concrete situation it wished to attain. The only resources that Moscow’s pre-revolutionary history could offer were idealized visions of Western politics and free-market economics.
Resources for the journey
At the same time, the cpc could draw upon the deep resources of the Chinese ancien régime. In contrast to Muscovy—little more than a wooden fortress before the fourteenth century—for millennia the densely populated, economically developed core of the state in eastern China provided a firm foundation for long periods of stable political rule, even as control over thinly settled outer territories waxed and waned. The cpc was also bolstered by the long political-philosophical tradition of the Chinese bureaucracy, whose scholar-officials were systematically inculcated with a duty to ‘serve the people’ and with the moral requirement placed by Mencius upon those who ‘first attain understanding’.footnote4
This philosophy was deeply embedded in the thinking of the traditional bureaucracy and was equally ingrained in the ideology of the cpc. Yang Changji, Mao Zedong’s teacher in Changsha between 1913 and 1919 who ‘made the strongest impression’ on the future leader, believed fervently that scholars had a special duty to put the fate of the country above their individual desires.footnote5 ‘Serve the people’—wei renmin fuwu—has echoed, as a central call of the cpc, from Mao’s speech in September 1944, five years before the People’s Republic was proclaimed, to Xi’s collected addresses.footnote6 It need hardly be said that few, if any, bureaucrats throughout Chinese history have been able to meet the high standards of selflessness, courage and responsibility required of the ideal government official. Between 2012 and 2017, the cpc’s Central Commission for Disciplinary Inspection took action against 1.4 million Party members in order to contain the rampant corruption within the Party which had spread with the growth of the ‘market economy’, as it is known in China—most notably in the massive property-development sector.
The idea of a non-market economy, with common ownership of property, also has ancient origins in China, going back to the words attributed to Confucius in the Book of Rites, itself compiled from earlier texts in the second century bc. It is clear that Confucius had in mind an ideal world, in which benevolence is the guiding principle; but the nature of property rights in such a world is open to debate.footnote7 Indeed, the critical passage is ambiguous: da dao zhi xing ye, tian xia weigong. According to the Republican-era philosopher Feng Youlan, this sentence should be interpreted as: ‘When the Great Tao was in practice, the world was common to all.’footnote8 His contemporary, the Japanese scholar Tsuchida Kyoson, rendered it: ‘When the Great Way is realized, all the world will be in common possession.’
A generation earlier than Feng Youlan, the Utopian thinker Kang Youwei, a constitutional monarchist and leader of the 1898 Reform Movement, had proposed a similar reading of Confucius. In his Da Tong Shu [Book of Great Harmony], Kang portrayed a society in which ‘all industry will be publicly controlled’ and ‘all commerce will revert to the control of the ministry of commerce of the government’. Economic planning would be carried out on a world scale, so that ‘the evils of under- and over-production can be avoided’. In the countryside ‘all land will be publicly owned and operated’, while planning would extend to every detail, including work patterns, which would be executed ‘like military orders’.footnote9
Mao was thoroughly familiar with Da Tong Shu. He argued that the only way to achieve the ‘world of great harmony’ was through a people’s republic, led by the working class.footnote10 Many of the features of Da Tong Shu are similar to measures put into effect under Mao’s leadership between 1956 and 1976, in the teeth of fierce opposition within the cpc. Indeed the ideas of the ancien régime in China, stretching back to the pre-Qin world, figure far more frequently in Mao’s speeches and writings than do the ideas of Marx. TheCommunistManifesto had a tremendous impact on him and he also made great use of Marx’s writings on the Paris Commune and his Critique of the Gotha Programme. But apart from this, he does not appear to have made a systematic study of Marx’s writings. The implementation under Mao of an economic system that virtually eliminated the market may have owed more to the radical streams in the history of Chinese thought than it did to Capital.
New buildings, old foundations
From the mid 1950s until the late 1970s, the main body of property in China was held in common ownership of one form or another. In December 1978, at the beginning of the reform process, the cpc took the decision to leave ‘the Maoist shore’ of the river—the administratively controlled economy, with common ownership of property—and cross to the other side. The nature of the other shore was left unspecified at the time. However, as China embarked on this journey, the gradual development of the ‘market economy’ interacted with a reintegration of the older tradition of Chinese political and ideological thought.
China’s history as a state dates to the Qin Dynasty in the third century bc; its philosophical traditions go back to the Zhou Dynasty (eleventh century bc–221 bc). The ancien régime ‘foundations’ for the cpc include the long history of the Chinese bureaucracy, based on a sophisticated literary and philosophical tradition codified in the imperial examination system. Meeting the needs of the mass of the population was understood as a political-philosophical principle, and a key task for the bureaucracy was nurturing the market in order to achieve economic prosperity. This relationship was famously formulated by Guan Zhong (720–645 bc), the renowned chancellor of the State of Qi in the Spring and Autumn period of Chinese history. The text that bears his name argues that, with the market brought into full play, everyone could benefit; but the market alone should ‘not be allowed to decide the abundance or deficiency of commodities’. There is a ‘right way’ to go about this, which the Guan Zi calls ‘handling the market’.footnote11
Other schools of thought existed, but views such as those expounded at the Salt and Iron Conference of 81 bc, which advocated that China should return to a Golden Age of barter in which the population ‘lived contentedly and demanded little’, were rarely in the mainstream of government policy. Far from eliminating the market, the state persistently sought ways to enable it to function more effectively through pragmatic and intelligent regulation—organizing a wide array of public works, including water conservation and transport infrastructure; attempting to stabilize prices of key commodities; developing famine-alleviation schemes; supporting the spread of knowledge through encyclopaedias and other written texts.
Under this system, China was a world leader in market-driven innovation for two millennia. Its inventions included the equine harness, paper and printing, advanced metallurgy through the use of the blast furnace, porcelain, tubular metal weapons, gunpowder for military purposes, the maritime compass, the sternpost rudder, watertight ship compartments, and canal-lock gates. The key components of the steam engine, the double-acting piston and the conversion of rotary to rectilinear motion—the quintessential breakthrough of the British Industrial Revolution—were developed independently in China.footnote12 The Chinese intelligentsia formed the core of the bureaucratic system; working within it was perfectly compatible with severe criticism of the way in which officialdom operated, even though this rarely sought the overthrow of the system itself. During this long history, the state aimed to support the economy through undertaking key functions that the market was unable to deliver; the market was always subject to regulation by the philosophically guided state.
The approach followed by the Chinese leadership since 1978 has borne a legible relationship to this tradition. From the beginning of the reform process and ‘opening up’, Deng Xiaoping made clear that henceforth China should follow a pragmatic and experimental path regarding relations between state and market. The market should not be left to function without guidance, but the state should continuously ‘seek the truth from the facts’ in relation to their respective contributions to the economic system. In the immediate aftermath of the trauma of 4 June 1989, Jiang Zemin reiterated: ‘The extent, method and scope of combination between the planned economy and regulation through the market should be constantly adjusted and perfected in accordance with the actual situation.’footnote13 Within the political philosophy of the ancien régime, this pragmatic perspective suggests that the correct way to regulate the market involves a non-ideological search for balance and interaction between the yin of the ethically guided state and the yang of market competition. The famous passage in the Book of Rites can be regarded as a philosophical foundation for this approach. As Wu Guozheng suggested, it can be interpreted thus: ‘When the great principle prevails, the whole world is bent upon the common good.’footnote14
Alternative paths
There has been fierce debate in China in recent decades on the nature of the country’s history and intellectual traditions, both on their own terms and in relation to those of the West. The distinctive character of this discussion can be seen in the willingness of Chinese intellectuals, not least those within the cpc, to combine reflections on their own past with investigations into Western history and philosophy, to help clarify the outlines of ‘the other shore’. In this they were following in the steps of Mao, who famously wrote: ‘Use the past to serve the present, and use the foreign to serve China.’ Mao’s tutor, Yang Changji, was a pioneer in the effort to engage closely with Western intellectual traditions. In the work of Adam Smith, China’s current leaders discerned a similar concern with state-market relations. In The Wealth of Nations, Smith famously analysed the contribution of the invisible hand of market competition to social and economic progress in the West. However, both there and, above all, in his Theory of Moral Sentiments, he also argued that, left to itself, the market produces deeply problematic outcomes in terms of inequality, the nature of work, the achievement of happiness and the ethical foundations of society.
Since 1978, this philosophy has been incorporated into the outlook of the Chinese leadership, with the goal of integrating the ‘visible hand’ of government regulation and the ‘invisible hand’ of market competition, through a process of continuous experimentation with the method of combining the ‘snake’ of regulation and the ‘hedgehog’ of market competition. There have been innumerable difficulties along the way and no doubt there will be more to come. Nevertheless, China’s record during this period has been remarkable. Between 1980 and 2018, its share of global gdp rose from 2.3 to 18.5 per cent, while that of the eu shrank from 30.1 to 16.2 per cent.footnote15 China has nurtured a formidable group of state-owned enterprises as well as powerful non-state counterparts. The principal firms are in the process of becoming globally competitive companies, with world-leading technologies, brands and reputations. Economic growth has provided the basis for a tremendous advance in popular material and cultural welfare. The expansion of the country’s physical and social infrastructure systems—transport, electricity, telecommunications, water supply and sewage—has contributed to greatly improved living standards for the mass of the population. An enormous programme of housing construction has helped provide decent homes and personal security for the hugely increased number of city-dwellers. Expanded health and education provision has made a vital contribution to mass welfare.
China’s ‘national rejuvenation’ is intimately linked to its long history of simultaneously nurturing and regulating the market. It is not hard to see why the Chinese leadership would believe that this experience could make an important contribution towards a political philosophy of intelligent, pragmatic regulation for the global economic system, in the common interest, over the decades and even centuries ahead. The cpc’s programme of reform and opening up led many Western commentators to believe that the West would dominate China in the twenty-first century. These views were reinforced when China joined the wto in 2001, but they have proved to be an illusion. The way in which China engages with the West is still an open question. The degree to which it ‘absorbs the outside world’ [xishou wailai] as opposed to ‘integrating with the outside world’ [ronghe wailai] remains unresolved. The outcome depends not only on China but also on the West.
The radically different nature of the anciens régimes in China and in Russia is one key reason for the survival and prosperity of the cpc and the disintegration of the cpsu. This difference has become progressively more distinct as China has moved away from the policies of the Maoist era. In the years since 1978, the nature of the ‘other bank of the river’ has become increasingly clear. It is not the ‘common property-ism’ of ‘gongchan zhuyi’. Rather, the market plays a central role in stimulating the economy, while pragmatic state regulation, with the cpc at its core, aims to ensure that the market serves the needs of the whole population. Irrespective of whether property is privately owned, held in common by the state or by cooperatives, or under mixed ownership, it will be subject to regulation by the Party and the government in the common interest. In this view, ‘groping for stones to cross the river’ has gradually revealed a path of reform leading towards the other bank, which might be described as a form of da tong zhu yi—‘great harmony-ism’, or perhaps ‘great commonwealth-ism’—drawing upon the age-old Chinese notion of a meritocratic bureaucracy that regulates the economic system in the interests of the whole population. China still has far to go, with huge internal and external challenges. However, China’s leaders and the Chinese people have been able to see increasingly clearly the broad outlines of the ‘other bank’ in their collective search for a ‘Way’ in the midst of a turbulent world.
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