"A Brief History of Neoliberalism," Chapter 5

While Chapter 4 of David Harvey's A Brief History of Neoliberalism outlines the uneven geographical implementation of neoliberalism, Chapter 5 analyzes the "peculiar path" of China's entry, via  the reforms initiated by Deng Xiaoping, into an increasingly neoliberalized and globalized economy (although it is more proper to say 're-entry' regarding the longue durée of China's relationship to global political economy). [1] Whether the outcome is socialism 'with Chinese characteristics' or privatization 'with Chinese characteristics,' the transformation of China's economy over the last thirty years has led to high growth, a rising standard of living, but also dramatic inequalities of wealth between urban and rural populations, with the resulting unrest and instability that such inequalities produce. [2] Much of this growth has been export led, and as such, China has benefited from the international frameworks for trade and finance that have promoted neoliberalism.

Unsurprisingly, especially for those who have been following our discussion, the central question for Harvey is whether the transformation of China's economy has led to the reconstitution of upper class power. His analysis is focused and does not lapse into shock and awe that the more popular punditry has produced while discussing China (some of these tendencies are described in Perry Anderson's review for the London Review of Books entitled "Sinomania"). Harvey argues that China has constructed "a particular kind of market economy that increasingly incorporates neoliberal elements interdigitated with authoritarian centralized control" (p. 120). In this regard, the salient features of China's political economy are:

• Accumulation by dispossession. Privatization of communal property and steps toward the financialization of the economy has created speculative bubbles in real estate. Corporatization of state owned enterprises followed by buyouts of worker shareholding (sometimes through coercive means) and state bailouts of non-performing loans have transferred large amounts of wealth to the elite. Yet class formation, Harvey argues, has been a complicated affair; while reforms have prevented "the formation of any coherent capitalist class power bloc within China," they have not prevented, through a combination of corruption, clientelism, and opportunism, a "growing integration of party and business elites in ways that are all too common in the US" (pp. 123, 150).
• Steep inequalities produced by uneven geographical development. Economic reform has reinforced social inequality between urban and rural areas. Not only is there a large disparity in income, there are reductions in social services and the implementation of user fees for public services. Residency restrictions (separating town and country) have led to a labor force of peasants (especially young women) that-- lacking legal protection-- is "vunerable to super-exploitation" not only through low wages, but also through non-payment of wages and pension obligations (p. 148).
• Proletarianization. The working class has nearly tripled between 1978 and 2000, increasing from 120 million to 350 million (270 million workers plus 70 million peasants who have found wage work). Greater flexibility (that is, precariousness) in the labor market, and uneven geographical development has produced large labor surpluses that the Chinese state has confronted through public deficit spending, on dam projects, and massive projects in infrastructure and public transportation. [3]

Nevertheless, China cannot just deficit spend its way out of political upheaval. As Giovanni Arrighi notes in Adam Smith in Beijing, "public order disruptions" (protests, riots, and other forms of unrest) have increased from around 10,000 in 1993 to 87,000 in 2005. [4] Harvey concludes with remarks on the possibilities for political subjectivity and mass movements in China. Rather than paraphrase, this passage is worth quoting at length:

Both state and migrant workers, [S.K. Lee] suggests, reject the term working class and refuse 'class as the discursive frame to constitute their collective experience'. Nor do they see themselves as 'the contractual, juridical, and abstract labour subject normally assumed in theories of capitalist modernity', bearing individual legal rights. They typically appeal instead to the traditional Maoist notion of the masses constituted by 'workers, the peasantry, the intelligentsia and the national bourgeoisie whose interests were harmonious with each other and also with the state'. In this way workers 'can make moral claims for state protection, reinforcing the leadership and responsibility of the state to those it rules'. The aim of any mass movement, therefore, would be to make the central state live up to its revolutionary mandate against foreign capitalists, private interests, and local authorities (pp. 149-150).

Whether the Chinese state responds to these challenges through outright repression, opportunist intervention, class compromise, or through a more egalitarian redistribution of wealth remains to be seen.

Next week, we will conclude with Chapters Six and Seven.

Notes

[1] Recall, of course, Mao's well-known remark that Deng was a secret 'capitalist roader.'

[2] Not to mention large scale and rapid environmental degradation.
[3] Deficit spending, and Chinese state control of capital flow run counter to the "global rules of the IMF, the WTO, and the US Treasury." While Harvey notes that these kind of economic practices cannot continue "in perpetuity" due to China's agreements with the WTO (for example), it's not difficult to notice that China uses its large holdings in US debt for political leverage.
[4] See Arrighi, Adam Smith in Beijing (London: Verso, 2007), 377.