Is China a capitalist state?

Some notes on Branko Milanovic's theory of "political capitalism"

Photo by Li Yang on Unsplash

Contemporary China has created a thorny conceptual problem for classical Marxists. The country designates itself as a communist republic, but this should matter for our analysis no more than the misleading fact that Nazi Germany incorrectly claimed a form of socialism. Neither, for similar reasons, should claims about government “intent” — here, expressed in the notion that China is “on the path to socialism” and is merely passing through a transitory phase of capitalist development. If China abandoned that rhetoric and claimed that it has decided to remain a capitalist nation would we have to retroactively declare that it was actually never communist in the first place? Who knows.

The only objective way to talk about this is to examine the material structure of China’s economy. But here, too, we run into a serious obstacle: the character of Chinese property.

Ordinarily, Marxism presents us with a simple binary: either property is private or it is not. If it is private then it stands beyond the reach of democratic governance and is subject to the ruthless processes of competitive acquisition that define the system of capitalism. If it is public, however, then workers can manage it in the public interest, thus pre-empting capitalist competition and giving us socialism.

Matt Bruenig has argued that based on this binary we can “define countries along a spectrum” of having more or less public property and thereby “describe countries as being more or less socialist”.

But here, too, China presents us with a problem. It is not merely that China’s economy contains a “mix” of private and public property, which would simply demand that we identify its correct location on the socialism-to-capitalism spectrum. The real problem here is that property in China does not seem to fit the private or public binary. Branko Milanovic:

The distinction between property arrangements — whether state-owned, purely privately owned, or any of a myriad of ownership arrangements in between (for example, a state-owned corporation raising private capital on the stock exchange, communal property mixed with private property, state firms with foreign private participation) — is quite blurred in today’s China… (Capitalism, Alone p.116)