X. Revisionist Whitewashing: China and Russia are Semi-Colonies rather than Great Powers (LIT / UIT / FT)

 

 

 

Note of the Editorial Board: The following Chapter contains several figures. For technical reasons these can only be viewed in the pdf version of the book which can be downloaded here.

 

 

 

 

A number of organizations adhering to the ideology of Trotskyism refuse the reactionary nonsense that capitalist restoration in Russia and China has not been completed. They rightly reject such Stalinist whitewashing of the ruling classes in China and Russia. Nevertheless, they don’t share our characterization of China and Russia as imperialist powers. This, in our opinion, contains the danger of objectively opening the door to lending support to these states in the Great Power rivalry.

 

Let us take for example two, larger, Trotskyite organizations standing in the centrist tradition of Nahuel Moreno which are both based mainly in Latin America: the “International Workers League - Fourth International” (LIT-CI) and the “International Workers Unity - Fourth International” (UIT-CI). [1]

 

As we observed in our recently published pamphlet on the Syrian Revolution and the Great Power rivalry, they correctly oppose both the military interventions of Russia as well as the U.S. in Syria. However, in their statements on this issue, they characterized only the Western powers as “imperialist” but refrained from doing so for Russia. [2]

 

These were not accidental oversights but a logical result of their theoretical analysis. The leaderships both of the LIT as well as of the UIT have repeatedly stated in theoretical articles that they consider China and Russia not as imperialist powers but rather as large semi-colonial countries like Brazil, Mexico, and India.

 

 

 

LIT: Is China Comparable with Brazil, India or Mexico?

 

 

 

Let us first look to the arguments of the LIT comrades.

 

“This example goes to prove that Chinese economy is being used by the multinationals to super-exploit the world, while turning China into a semi-colony of world imperialism, a condition of submission which leads to immense contradictions that will explode in the forthcoming years. (…) And then a myth cropped up: China is to be the new global superpower, followed by new regional powers: Brazil, Russia, India, Mexico, South Africa, etc. It is true that these countries have a privileged relation with imperialism; however, this relation presupposes their subordination to the transnationals: they are part of the process of recolonisation.” [3]

 

They view China as a kind of subsidiary of U.S. imperialism as the following quotes demonstrate.

 

“So, an unprecedented historical combination occurs: the Stalinist apparatus, that had led the revolution and built the Bureaucratized Workers’ State, restored capitalism and remained in power after doing so. But now they no longer defend the economic and social basis of a Workers’ State, they are in the service of imperialist capitalism. (...) We have referred to the “tandem mechanism” of the Chinese and U.S. economies. But they are not equal and equivalent “locomotives”. One was the main and dominant (U.S.), the other was subsidiary and dominated (China). China turned into the “factory of the world” not as a dominant potency, but as a subordinated country in an accumulation model dominated by imperialist capital. From this point of view, the model’s global mechanism is similar to strong semi-colonial countries, like Brazil. (...) It is capitalist because of the accumulation model dynamic that we have analyzed. It is also a dependent capitalism because imperialist capital controls both ends of the process (investments and exports).” [4]

 

“Is China an Imperialist Country?

 

The reality we have described leads many analysts to consider China as the “emerging power of the XXI Century”. From the perspective of many Marxists it is a new imperialist or sub-imperialist country (imperialist but dependent on a stronger imperialism). This latter characterization is based on the following reasoning: given that Lenin (on his famous book on the subject) has defined the main characteristic of imperialism as the export of financial capital, countries that have companies that do so (and therefore extract surplus value from others) acquire an imperialist character. This logic is applied not only to China, but also to other countries like Brazil.

 

We believe this characterization is mistaken because it focuses on only one element (the existence of capital exporting companies) to mechanically define the whole character of the country and its location in “international hierarchy”. But if we observe it more deeply, we will find that at the current stage of capitalist development, there are companies like that in countries nobody can characterize as imperialist. (In what follows, the LIT comrades refer to examples of companies in Peru, Chile, Argentina, and Brazil; Ed.) These companies act as multinationals (similar to imperialist companies). They extract surplus value from their investments abroad. In many cases, they plunder natural resources and send most of their profit to their head offices. But this reality must be understood in the whole context of the country of origin. We must analyze whether this surplus value obtained abroad is the main axis of the country’s economy, or on the contrary, it only represents a contradictory (and privileged) element in a more general process. A process in which a country turns in most of the surplus value to the main countries (through imperialist companies’ profits repatriation, foreign debt payment, plundering of natural resources, etc.). For us this is clearly the situation of Peru, Chile, Argentina and also Brazil.

 

China’s case is more complex, because the State and bourgeoisie have a significant volume of capital and make large investments abroad, which allows them to have a relative autonomy, which we have already referred to. However, the Chinese economic model does not work around the surplus value obtained abroad. On the contrary, they turn in most of the surplus value obtained in the country to imperialist financial capital. If we analyze Chinese investments, we will see that most of them are used to support their monetary reserves, or guarantee the supply and transportation of the commodities and food they import. Secondarily, they seek relief for the overproduction of steel, construction and mechanical products in the country. They are subsidiaries, subordinated to the accumulation model as a whole, and at its service. In other words, they ultimately ensure imperialism’s surplus value.” [5]

 

The LIT maintains this position even now when the Global Trade War between the U.S. and China has begun.

 

“We talked about the “tandem mode” of the US-China economies. But both roles are not equal or equivalent. One is the main and controlling one (the US) and the other is a subsidiary, the dominated one (China). China became the “world factory” but not as a dominating power but as a subordinated country, in a model of accumulation controlled by imperialist capitals. From this point of view, the global economic model of China is similar to those of the strongest semi-colonial countries, like Brazil.” [6]

 

So, in summary, the LIT imagines that China is a semi-colonial country which is super-exploited by U.S. (and other) imperialist powers.

 

 

 

UIT: China is Super-Exploited by Imperialism?

 

 

 

The comrades of the other major Morenoite tendency, the UIT-CI, basically share the same methodological approach. The UIT, as the quote below demonstrates, also characterizes both China and Russia not as an imperialist power but as a semi-colony.

 

“The definition of China as a capitalist country has its peculiarities, on the basis that it is a country where capitalism was restored and is still governed by the CPC, a Stalinist party. It is not an imperialist country because it is a country that has been semi-colonized by the large multinationals of imperialist world (U.S. and European), which dominate it, and its total dependence on exports to those countries. China is a large semi-colony with respect to imperialism, such as, for example, Brazil, India and Russia, minding the differences” [7]

 

And, like their comrades from the LIT, the UIT also maintains this position even now, when the Global Trade War demonstrates that China is indeed able to challenge the biggest imperialist power on earth!

 

“China and its insertion in the global market

 

(...). Forty years later, the Chinese economy went from representing 1.8% of the world market to 18.2%, but the cost of associating with large multinationals and subordinating themselves to imperialist plans was paid for the loss of those historic gains and the a return to a brutal social inequality, megacorruption and superexploitation, with strenuous workdays and miserable salaries under a regime of a single-party capitalist dictatorship. Successive worker strikes in recent years, such as the one in Dongguan in 2014, the largest in the history of the People's Republic of China, call into question the exploitation model of the Chinese dictatorship and its false "socialism with Chinese characteristics".” [8]

 

As we have shown above (as well as in many other studies), the Morenoite assessment of China and Russia as subordinated and super-exploited countries under the mercy of U.S. imperialism is a caricature of reality. China has become the most important challenger of the US as the world’s hegemonic power. It has already overtaken all other imperialist powers (like Japan or the Western European states). While foreign capital did play an important role in the past, this has been strongly reduced. While the share of foreign direct investment in China’s fixed capital formation was about 17% in 1994, it has been only about 2.5% by 2014. [9]

 

Russia, while economically weaker than China, has also proven capable of challenging the Western domination in the Middle East. So, we ask the leading comrades of LIT and UIT: how do you explain that Russia and China, these supposed semi-colonies of U.S. imperialism, manage to challenge the supremacy of Washington?! How do they explain that Putin has succeeded to bring Syria under his control and expand Moscow’s influence at the expense of the U.S.?! How do they explain that China is becoming one of the, if not the, largest foreign investor in Africa, Asia and Latin America and that its political weight is constantly rising to the strong irritation of the U.S. Administration?!

 

Unfortunately, all these fundamental changes in world capitalism in the past one, two decades seem to have gone completely unnoticed by the LIT and UIT leaders! Trotsky once remarked: „What characterizes a genuine revolutionary organization is above all the seriousness with which it works out and tests its political line at each new turn of events.“ [10] It would be very helpful for the comrades of LIT and UIT to take this advice into account!

 

Any equation of semi-colonies like Brazil or India with Russia or China is completely absurd. As we have shown in other works Russia’s economy is dominated by domestic monopolies. [11] Key sectors like oil, gas, banking, and metal are controlled by a few large corporations which are usually closely linked with the state. According to a calculation from 2004, the 22 largest Russian monopolies employ 42% of the labor force and account for 39% of sales, while the capitalist state (both regional and federal combined) employ another 21% of the labor force and account for an additional 36% of sales. On the other hand, foreign corporations employ only 3% of Russian workers and sell only 8% of the goods and services produced in the country. [12]

 

China, as we have demonstrated in detail, is home of the second-largest number of multinational corporations in the world (only behind the U.S.). At the same time, the share of foreign capital in the Chinese stock market is only around 5% and around 2% in the Chinese bond market. [13] Arthur Kroeber, author of a major study of China’s economy, concludes “that [state-owned enterprises] account for about 35 percent of GDP (...), domestic private firms account for about 60 percent of GDP, and firms controlled by foreign investors account for the remaining 5 percent or so.” [14] In short, China is not dominated by foreign capital but rather dominates other countries.

 

In contrast to Russia and China, Brazil has always been dominated not by domestic but by foreign monopolies. We have described this in more detail in our book The Great Robbery of the South. A study of Brazil in the 1960s demonstrates that 31 of the 50 largest private enterprises were controlled by imperialist capital. Out of 276 large companies, more than half were controlled by foreign owners. ^[15]

 

Since the time of these studies, the picture has not changed. Today, imperialist corporations control nearly half of Brazil’s foreign trade and more than half of the largest 500 private Brazilian companies: “The high FDI inflows have meant an increase in the foreign share in the Brazilian economy. (…) Foreign corporations also increased their share of the country’s foreign trade, reaching 41.3% of exports and 49.3% of imports. The role of the foreign capital is even stronger when we consider only large companies. Among the largest 500 private Brazilian companies, those under foreign control accounted for 41.2% of sales in 1989. This share increased to 49.9% in 1997 and, by 2003, reached 51.7%.” ^[16]

 

 

 

FT: Russia and China can not become Imperialist without a Major War?

 

 

 

The Trotskyist Fraction – Fourth International (FT) whose main force is the Socialist Workers' Party (PTS) in Argentina, also rejects the characterization of Russia and China as imperialist. Like the statements of other centrists, the FT declaration on the recent events in Syria uses the term “imperialist” only when it comes to the actions of the US and Western powers but not when they mention Putin’s war of aggression. [17] Again, this is no accident as one can see from more elaborated documents of the FT.

 

This becomes evident from a statement of Philippe Alcoy, a leader of the FT in France. This comrade wrote in April 2018:

 

“With the international economic crisis of 2007-2008, this situation started to change. The failure of the US-led invasion of Iraq and Afghanistan marked a relative but real decline in the world hegemony of the north-American imperialist, even if today there is no new imperialist power to challenge the USA.

 

It is in this context that we must understand this new offensive of Western powers against Russia. Not that Russia is challenging USA hegemony (it is really far from that). We are not in a “new Cold War”. In the end, the conflict is not even between Russia and “the West”. It is a move from the USA to prevent any international power, or international alliance from challenging its hegemony as the main imperialist power. (...)

 

Russia is not really an imperialist power but a regional power able to influence some international affairs. Its military power and its positions in international organisations (inherited mainly from the Soviet period) create the “illusion of world super power”. But since the end of the Cold War, the Russian economy has become almost completely dependent on production and export of gas and oil (which technology is largely imported form imperialist countries); its main area of influence is the former Soviet space; the central role it plays in Syria today is mostly the result of the huge blow it received in Ukraine in 2014. Moreover, with the Western offensive Russia is becoming a “pariah state”.“ [18]

 

This statement is completely nonsensical and reflects the FT’s failure to understand the fundamental dynamics of the current historic period. While in fact the accelerating rivalry between the imperialist Great Powers and, in particular, the challenge of the U.S. hegemony by Russia and China are key features of the world situation, the FT simply denies this reality. It states: “today there is no new imperialist power to challenge the USA”

 

Well, if there is supposedly no challenge to the U.S., we ask the comrades, how do they explain that there is a looming Global Trade War between the U.S. and China?! If this is not a challenge, what than is a challenge?! And do the FT comrades want to deny the fact that Russia has effectively outmaneuvered the U.S. from the negotiations in Syria – a key area of the political dynamic in the Middle East. (The FT’s explanation of Russia’s role in Syria that this “is mostly the result of the huge blow it received in Ukraine in 2014” lacks any logic. If Russia was weakened by the events in the Ukraine why should it, as a result of that, be able to dominate Syria?!) Likewise, it plays an influential role in other key powers in the Middle East like Iran and Turkey. And in Eastern Europe and Central Asia Russia is also able to challenge the U.S.

 

Similarly with China. While the FT concede that China has certain “imperialist features” it claims that neither Russia nor China have created an “independent capitalist class”. [19] Hence it talks, in the case of China, not about the “ruling class” but about the “ruling bureaucracy”. The following quote, taken from the central political document adopted at their recently held international conference, demonstrates that the FT claims Russia and China are much too weak and backward to challenge the U.S. They explicitly deny that China can become an imperialist power “on a peaceful road”, i.e. without a prior major and victorious war against U.S. imperialism.

 

“In the past years, the imperialist features of China have deepened. (…) Briefly, China can not challenge today the global supremacy of the U.S. which will remain the most important imperialist power in the next years. The GDP per capita of China is much to low (...), the differences in the military field are still huge, and the same holds true in the technological sector. Furthermore, neither in China nor in Russia could an independent capitalist class consolidate itself given the peculiarities of capitalist restoration. Hence, the role of the state is still dominant. (....) There exists a double challenge: China wants to get out of the limitations which the imperialist world economy imposes on it and at the same time the U.S. tries to break China. (...) This demonstrates that there is no possibility of a “peaceful road” towards an imperialist development of China.” [20]

 

Surely, China and Russia are “backward”, compared with the U.S. and other Western powers, when we look at their GDP per capita. But, as we have demonstrated in several studies as well as in this book, such discrepancies between imperialist states have often been the case and do not contradict the imperialist nature of such “backward” Great Powers. We remind the FT comrades that such unevenness between the Great Powers always existed in the epoch of imperialism.

 

It is true that U.S. imperialism is, in principle, still superior to its rivals including Russia and China. But the truth is always concrete as Lenin liked to say. Yes, the U.S. is the biggest economic and military power. However, at the same time it is overburdened by the global responsibilities as the former absolute hegemon of the world. Contrary to Russia and China, the ruling class of the U.S. is bitterly divided.

 

To make a comparison: the U.S. is like a big beast which is wounded. Russia and China are like smaller tigers which are, contrary to their rival, fit and fast. Under such conditions, the superiority of the U.S. becomes more relative and limited.

 

The thesis that China (or Russia) can not become imperialist powers “on a peaceful road” is not new. It has already been raised against the RCIT by another Latin American group. As we did reply already to these comrades, we consider such a position as fundamentally wrong. Of course, there has never been and there can never be a peaceful coexistence between imperialist powers in the long run. This is a pillar of Marxist theory as we have always pointed out.

 

But why do the FT comrades insist that there must be a war before a state can become an imperialist power? Where did Lenin or Trotsky say such a thing? The US, Japan, and the EU have declined in the past decades without a world war. (See e.g. Figure 30 which demonstrates the decline of the Western Great Powers U.S., Germany and Japan in the past decades.) In the same period, new great powers can and have emerged.

 

 

 

Figure 30. Share in Global Merchandise Exports, 1948–2017 (in Percent) [21]

 

 

 

 

 

Furthermore, we would like to remind the comrades that Lenin himself explicitly pointed out the possibility of the emergence of new imperialist powers: “Capitalism is growing with the greatest rapidity in the colonies and in overseas countries. Among the latter, new imperialist powers are emerging (e.g., Japan).” ^[22]

 

The failure of the FT comrades to understand the rivalry between the US and China as the rivalry between two imperialist Great Powers becomes also apparent in another recently published article. This article, titled “21st Century Economic Nationalism”, deals with the rising tensions between the two powers on the issues of trade. However, despite the length of the article the author fails to mention a single time the word “imperialist” or “imperialism”! [23]

 

We see the same failure in the FT’s analysis of the Global Trade War. In a recently published article they fail to understand the tensions as an inter-imperialist conflict between Great Powers. Consequently, while they name the US, as well as the European Union, “imperialist”, they refrain from such a characterization of China. [24]

 

It is clear that the development of reality is far more advanced than the empty, wooden schemas of centrism. While they deny the imperialist nature of Russia and China, the reality is marked by the challenge of Western imperialism by the new Great Powers of the East. The centrists are, to paraphrase Lenin, prisoners of old formulas. [25]