Elias Jabbour: The “fundamental law” of the new Chinese socioeconomic formation

This brief original essay by Elias Jabbour, Professor at the School of Economics, Rio de Janeiro State University, introduces a key idea from his book with Alberto Gabriele, China: Socialist Economic Development in the 21st Century (due to be released by Routledge in English in March 2022), emphasising that China’s combination of a hybrid economy, Communist Party leadership and innovative and effective governance collectively constitute an important development of Marxist political economic theory.

The task of each and every social scientist dedicated to the evolution of humankind runs through understanding in which stage the human anatomy is, what we must keep in mind in order to better understand the progress of the monkey´s anatomy.

Likewise, in socio-historical terms, it is central to comprehend which is the most advanced formation in course in the world today. This is how we arrived at the Chinese “Market Socialism” and its particularities, what led us to designate it as a “new socioeconomic formation”. As President Dilma Roussef pointed out at the launch of our book, it is “not emerging as a result of a pre-existing capitalism”. The challenge now is to discover the nature of its functioning, its internal coherence, the “universal in the particular”.

A socioeconomic formation is composed of modes of production from different historical stages, which overlap each other. Depending on the opening index of the country´s economy, the international markets become a pressure factor from one mode of production to another. This is how Lenin and Rangel perceived the role of the international markets in the penetration of capitalism in Russian and Brazilian agriculture and the consequent overcoming the natural subsistence economy and, even, the feudalism in the countryside.

In Chinese agriculture, the process of elevating the productive forces takes place under the auspices of an immense degree of planning. In this sense, we refer to Adam Smith and analyze how the rise of the role of the market economy occurs, what happens both in terms of the rise in labor productivity and in the unification of the Chinese national market.

We arrived at “Market Socialism” when we noticed that the increase in productivity occurs mainly in the public sector of the economy, not in the private sector. Its political counterpart is a new type of superstructure, an illiberal democracy led by the Communist Party of China (CPC).

The labor productivity as a key factor is fundamental to build a vision that brings us reason as a synthesis of movement, totality and the multiple correlations of phenomena. We thus abandon static aggregate demand schemes or ahistorical concepts such as “State Capitalism”. Totality and history also replace the increasingly limited studies based on the relationship between State and market, “Entrepreneurial State” etc. We try to note the role of the power bloc and its mutations in light of the expansion of the working class, as cause and consequence of the rise of the “socialist market economy”.

In this sense, we can highlight that the fundamental law of Chinese Market Socialism relies in the combination of different modes of production, where the increase in labor productivity in the public sector of the economy (socialist mode of production) ends up by settling the differences between the public and private, insofar as the rise in productivity in this sector gives rise to new historical forms of ownership and new social relations of production and exchange, as I and Alberto Gabriele stated in “China: Socialism in the 21st Century”.

The substance of the Chinese reality is being built through institutional innovations that give rise to new and superior forms of action and new state capabilities. From the rise of productivity in the public sector of the economy, disruptive technological innovations also emerged. The elevation of planning is held in unprecedented levels, which sign the ascension of a higher level variation of the dominant mode of production than this new socioeconomic formation. We finally arrive at the New Projectment Economy.

Evidently, we arrived at “Market Socialism as a new socioeconomic formation” inspired by Hegel. We overvalue abstraction and devalue the abstract. We abstract and by doing this we reduce matter to the sensible, a simple phenomenon, the essential, which only manifests itself in the concept. Abstraction thus becomes what is commonly called concrete. Perhaps we have arrived, with the notion of “Market Socialism as a new socioeconomic”, at the substance of Chinese reality.

2 thoughts on “Elias Jabbour: The “fundamental law” of the new Chinese socioeconomic formation”

  1. Spot on.

    China actually has a more rational form of capitalism because it understands the capitalism better than does the U.S.; the U.S., like many Western plutocracies or social democracies (since there are some remnants of that in the West still) suffers from regulatory capture by industries and various private interests, which prevents the rational development of capital. Whereas China, because it is a worker’s & peasant’s democratic dictatorship, i.e., where the ruling classes aren’t the capitalist classes, means that the market can be regulated in the interests of developing productive forces (including raising the wages of the working classes), and actually allowing capital to expand more than in a context in which the state becomes a mechanism of accumulation for the capitalist classes. Where, in effect, the capitalist classes cease to be capitalist proper, since they no longer rely upon capital for wealth accumulation, but instead they rely upon capturing the state for wealth accumulation. You can see this in the U.S. through the legalized corruption of ‘lobbying’: the capitalist class no longer invests in production or innovation, instead they invest in ensuring legislation will be passed which will divert public funds into their coffers. The state under the late(st) stage of capitalism becomes a mechanism for wealth accumulation for the capitalist classes since it has been captured by them. It extracts wealth from the working classes in order to upwardly redistribute it.

    In contrast, China harnesses the market and capital in order to drive economic development and innovation: with each five-year plan the regulatory environment (the rules of the game for capitalists) is changed, in order to harness capital for the purposes of advancing the interests of the whole of society. China is now entering into another phase where it is laying the infrastructural groundwork for the next phase of socialism: in particular, the digitization of the economy, and the introduction of the digital currency (which will eventually replace physical representation of currency altogether) is going to permit for the real time management of the economy as a whole and allow us to transcend capitalism and enter into a new higher phrase of development. China has both huge swats of capital AND the institutional and infrastructural capacity to direct that capital towards further development of the productive forces worldwide, and is using its economic development to propel humanity into a new future.

    The West cannot keep up, because the superstructure (i.e., government institutions and ideology) have become outdated and are no longer rational with respect to the phrase of development of the productive forces. Whereas China’s superstructure both advances and changes with the development of the productive forces, and positively acts upon the productive forces (the base) by rationally organizing it for further future development. In short, China has a dialectical/logical form of government, vs. the irrational form that exists in the West, which is attempting to preserve itself despite having become outdated. China engages an integrative process of governance system updates that reflect the reality of the economic base, i.e., the stage of development of productive forces; vs. the West’s governance systems lag behind the reality of the development of the economic base.

    The West will be forced to innovate, the question is whether it will actively embrace this and consciously choose to adopt a new constitutional framework that better reflects the actual capacities of the economic base (including the new capacities offered by the information technology infrastructure which can be used to make the governance system more rational). Or whether it will choose to resist and will therefore exacerbate crises by refusing to update its institutions.

  2. The so-called new Chinese socioeconomic formation is not “new”; it is the same old commodity production and exchange, i.e., capitalism. Capital accumulation is modeled by the general formula for capital discussed by Marx in Capital, volume 1. From the viewpoint of commodity circulation, the formula is C-M-C; from the viewpoint of capital accumulation, it is M-C-M’. China is not a special case. There and elsewhere these processes result in the same social antagonisms that Marx discussed in Chapter 25 of Capital volume 1, on The General Law of Capitalist Accumulation. Since China’s “new socioeconomic’ formation” is actually just the old system that we all know as capitalism, the rational conclusion is that opportunities for a successful socialist revolution in China will increase as Chinese capitalism matures and inevitably decays.

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