IX. Revisionist Whitewashing: Russia and China are neither Capitalist nor Great Powers (PO/CRFI)

 

 

 

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 peculiar example of “Trotskyist” whitewashing of Russian and Chinese imperialism originates from the so-called Coordinating Committee for the Refoundation of the Fourth International (CRFI) of which the Argentine Partido Obrero (PO, Workers Party) is the dominant component. It is useful to deal with the positions of this current because they are more consistent than most other pseudo-Trotskyists in drawing conclusion from their theory that Russia and China are not imperialist.

 

 

 

Capitalism is still not restored in Russia and China?

 

 

 

PO/CRFI claims that capitalism has not been restored in Russia and China until today. In the founding document of the CRFI, i.e. in the year 2004, the authors stated that “the restoration of capitalism (…) is in its initial stages” in the ex-Stalinist states in Eastern Europe and Asia. ^[1] So, 15 years after the collapse of the Berlin Wall and the Stalinist bureaucratic rule in 1989, the restoration of capitalism and the creation of a capitalist class was still “is in its initial stages”?! What an absurd and bizarre nonsense! Were Eastern Europe, Russia, China etc. not dominated since 1989-92 by governments which advanced the restoration of capitalism?! Were these economies not soon to be governed by the capitalist law of value?! Were these economies not already long before 2004 dominated by a private capitalist sector?! It seems that the PO/CRFI leaders were living in another world! ^[2]

 

Worse, PO/CRFI upholds such sterile dogmatism until today! In a recently published article on China the PO leadership effectively still denies – in the year 2017! – that China has become a capitalist state. ^[3] Pablo Heller, a leading PO theoretician, still speaks about “the process of transition towards capitalism”. (“The transition to capitalism in China enters a more violent period.”) As if this transition would have not already taken place many years ago!

 

Unbelievable, in its latest extensive international statement, the PO leadership even claims that capitalism could not be established in the future in Russia and China “on a peaceful road”: “A “peaceful” transition to capitalism, on behalf of regimes that expropriated capital through social revolutions, is unviable.” ^[4] We have seen those pseudo-orthodox Trotskyists who predicted in 1989 that it would be impossible to restore capitalism in the former workers states without civil wars. Already at that time, we criticized such doctrinarism. However, PO easily beats all those doctrinaires at that time as it still upholds such nonsense three decades after the collapse of Stalinism and the restoration of capitalism!

 

“Armed” with the same doctrinaire logic, PO and their international affiliates also claim that Russia and China are still not integrated into the capitalist world economy: “The integration of the former nationalized economies into the world capitalist economy cannot proceed by 'peaceful' means.” ^[5] The same assessment is repeated in an essay published in autumn 2018: “What determines the character of war in the 21st century is the encirclement of Russia and China by US imperialism, in alliance with its subordinate allies of European and Japanese imperialism, in order to integrate the former countries into the imperialist world system in unrestrained fashion by bringing the process of capitalist restoration in these countries to its completion.” [6]

 

Can one seriously claim that Russia and China are still not “integrated into the imperialist world system”? True, they are not subjugated to Washington. But since imperialism is not reduced to one Great Power but is a system built on rivalry between Great Powers (in line with Lenin and Trotsky we reject Kautsky’s theory of Ultra-Imperialism which assumed that the Great Powers would overcome their rivalry), it would be strange if Great Powers would not exist outside the orbit of Washington.

 

But China and Russia are certainly integrated into the imperialist world system! As we have shown above, Beijing has become the world’s largest trading power. It is one of the leading foreign investors as well as creditors. How can a country be more integrated into the imperialist world economy?! And can it be the case that the PO leaders have never heard about China’s “Belt and Road Initiative” (BRI) – an international investment program effecting 65 other countries and designed to expand Beijing’s global economic and political influence?! ^[7] The BRI initiative is the Chinese version of the so-called Marshal Plan which was crucial for US imperialism to consolidate its imperialist domination in Western Europe after WWII. [8] What examples do the PO/CRFI comrades need more to recognize that that China is fully integrated in the capitalist world system?!

 

The PO leaders basically maintain the same position for Russia. This becomes evident from another article which it published some months ago. In it, the PO leadership claims: “Neither in Russia nor China has a bourgeoisie emerged as a class, since in both cases it is mediated by the State, which continues to hold on to large part of its “pre-capitalist” bureaucratic structure.” ^[9]

 

So, again, we are faced with a monstrous absurdity which even most Stalinists don’t dare to uphold! The state machinery in Russia is supposed to be a “'pre-capitalist' bureaucratic structure“ when, in fact, it is acting as a capitalist servant for the oligarchs – both domestically and abroad – since nearly three decades! ^[10]

 

As we have demonstrated in our studies on Russian imperialism, its economy is dominated by powerful monopolies. The thirty-two largest of these monopolies – also called “financial-industrial groups” (FIG) in Russia – control almost 51% in Russia’s GDP. (See Figure 27)

 

 

 

Figure 27. Russia's GDP by Contributor (in US$ Billions and as a Share) ^[11]

 

 

 

 

 

 

 

 

 

According to a 2013 report of Credit Suisse, a small group of 110 billionaires owns 35% of all the wealth in Russia. ^[12] If we look again to the World Inequality Report 2018, we can observe a similar trend like in China, albeit even more drastically. In Figure 28 we see that the income share of the top 10% was relatively low when Russia was still post-capitalist. However, this radically changed from 1989 onwards. The share of income of the top 10% grew from 22% to 41% (2015)! During the same period did the share of the bottom half of the population collapse from about 30% of national income to only 17%!

 

 

 

Figure 28. Income Share in Russia, 1905-2015 ^[13]

 

 

 

 

 

Only the most ignorant observer could deny that this process of radical distribution of national income from the popular masses to the elite in a period of capitalist restoration reflects the creation of a powerful bourgeois class.

 

So, we ask the PO comrades: who are these top 10% in Russia who have the same share of national income like the top 10% in North America?! Are these not the capitalists and the upper middle class?! Does PO honestly believe that this is some kind of bureaucracy?! No, as a matter of fact, the process of capitalist restoration has resulted in the creation of a capitalist class. Today, it is the bourgeoisie which dominates all these countries – the U.S., Europe as well as China and Russia. PO’s claim that no capitalist class exists in Russia and China is a total absurdity which reflects its political aloofness from the reality of global capitalism!

 

Unsurprisingly, the PO/CRFI’s arguments why Russia and China are supposedly no imperialist powers are not much better. In reply to our pamphlet directed against their theoretical foundation, PO/CRFI recently published an article in which it polemicised against the Marxist analysis of the emerging Great Powers in the East. [14] While this article constitutes a serious effort to defend their position, it suffers from three fundamental problems: a) its arguments are in contradiction to the Marxist theory, b) they are also in contradiction to the objective facts and c) they lack inner coherence.

 

A key thesis of PO/CRFI is that Russia and China can not possess an imperialist class character because of their (alleged) backwardness in terms of capital export. Since the PO/CRFI formally adheres to Lenin’s theory of imperialism, they face the problem – like all supporters of the “Russia and China are not imperialist”-Thesis – to explain why the leader of the Bolsheviks counted at his time countries like Russia, Japan, Italy or Austria-Hungary among the imperialist states. As we have demonstrated above, these states exported much less capital than Britain, France or Germany and they often imported more capital than they exported.

 

As we have shown above, the imperialist powers at the time of Lenin and Trotsky differed both in their political superstructure as well as in the specific configuration of their economic basis. [15] However, what united them was that they oppressed and exploited, directly or indirectly, other nations. Lenin summarized his definition of an imperialist state in one of his writings on imperialism in 1916 in the following way: „… imperialist Great Powers (i.e., powers that oppress a whole number of nations and enmesh them in dependence on finance capital, etc.)…“ ^[16]

 

 

 

Lenin’s Theory of Imperialism and its Stalinophile Falsification

 

 

 

Hence, the revisionist deniers of Russia’s and China’s imperialist character today have to “re-interpret”, i.e. falsify, Lenin’s theory of imperialism. They have to claim that supposedly Lenin did not consider states like Russia as imperialist. The PO/CRFI is not the first and probably not the last to revise the Marxist theory of imperialism. Let’s see how they are arguing their case:

 

“In the age of imperialism, great powers define the act of war and carry out the territorial division of the world. However, the analysis of imperialism requires making distinctions between these great powers. According to Lenin, among the six great powers that divided the world, the United States, Germany, and Japan were young and emerging capitalist (imperialist) states and England and France were the old capitalist (imperialist) states. With a socio-economic structure dominated by pre capitalist relations and surrounded by modern capitalist imperialist forces, Russia was quite different from others. While defining Russia’s position in the World War I as imperialist, Lenin stressed this crucial difference: “In Russia, capitalist imperialism of the latest type has fully revealed itself in the policy of tsarism towards Persia, Manchuria and Mongolia; but, in general, military and feudal imperialism predominates in Russia.”

 

The elements of militarism and feudalism that dominated Russian imperialism were also present in Ottoman imperialism. However, the Ottoman Empire was a semi-colony and did not possess the distinct characteristics of imperialism defined as the highest stage of capitalism. Therefore, neither Russia nor the Ottoman Empire cannot be seen as imperialist powers that defined the (imperialist) character of the World War I. They were dependent on great imperialist powers and therefore occupied a secondary position (at best) in the inter-imperialist rivalry. Hence, the imperialism of Russia and the Ottomans resembled the imperialism of the Greater Rome rather than capitalist imperialism.

 

The emphases on monopoly capitalism, finance-capital, and capital export in Lenin’s theory of imperialism displays the main foundations of the great powers struggling for the division and re-division of the world. Large armies, expansive territories, and relatively high populations were the sources of power of the pre-capitalist empires. In the age of imperialism, the export of capital took the place of military campaigns and finance-capital invading the markets took the place of invading armies. On the international plane, imperialist armies (that are financed by super profits derived from the plunder of raw materials and exploitation of cheap labor power and using the technical and technological capabilities supplied by capitalist industry) became dominant in every field. The armies of the pre-capitalist empires proud of their almighty past were either defeated by the imperialist invaders (as seen in the case of China) or became auxiliary powers in the service of imperialism (as seen in the cases of Russia, the Ottomans, and Austria-Hungary).“ [17]

 

So we see how the PO/CRFI turns the Marxist theory of imperialist states on its head in only three paragraphs. While Lenin, Trotsky and the Bolsheviks always consistently argued that Russia (or the Austria-Hungarian Empire) were imperialist powers, the PO/CRFI comrades now claim that these were semi-colonies (like the Ottoman Empire)!

 

The Bolsheviks’ characterization of Russia as “imperialist” is presented as an a-historical category suggesting that they considered Russia only as “imperialist” like the Roman Empire 2000 years ago, i.e. not as imperialist in the sense of a capitalist power! This is a bizarre distortion of truth!

 

We have already shown above that Lenin viewed Russia as an imperialist power (in the same category as France). One can find dozens of other quotes which make clear beyond any doubt that the Bolsheviks never ever characterized Russia as a semi-colony (like the Ottoman Empire) but as an imperialist Great Power. They were certainly aware of the differences between various Great Powers (more and less independent powers, economically advanced and backward, etc). But they saw Russia in the same broad category as other imperialist Great Powers! In place of many more we reproduce a short selection of these quotes:

 

“Only idiots or shrewd persons can deny that the war from Russia’s part has an extraordinary imperialist character. The whole political order of 3^rd June has been an attempt to bring together the capitalist bourgeoisie with the bureaucratic machinery and the nobility – under the condition that the monarchy succeeds satisfying the international ambitions of Russian capital. (…) Russian imperialism, whose extraordinary counter-revolutionary character has been beyond doubt for all Russian social democrats, has played a huge role in the preparation of the present war.” [18]

 

„Its meaning is that Russia was the most backward and economically weakest of all the imperialist states. That is precisely why her ruling classes were the first to collapse as they had loaded an unbearable burden on the insufficient productive forces of the country. Uneven, sporadic development thus compelled the proletariat of the most backward imperialist country to be the first to seize power.“ ^[19]

 

“The Russian bourgeoisie was the bourgeoisie of an imperialist oppressor state; the Chinese bourgeoisie, a bourgeoisie of an oppressed colonial country.” [20]

 

„But the Russian bourgeoisie enjoyed the benefits of an immeasurably greater independence from foreign imperialism than the Chinese bourgeoisie. Russia itself was an imperialist country.“ [21]

 

“In Russia, capitalist imperialism of the latest type has fully revealed itself in the policy of tsarism towards Persia, Manchuria and Mongolia, but, in general, military and feudal imperialism is predominant in Russia. In no country in the world are the majority of the population oppressed so much as in Russia.” [22]

 

“The Russian imperialism differs from Western European imperialism in many aspects. It is not an imperialism of the latest stage of capitalist development. Russia is a country which imports capital, which is an object of capital exporting countries. The Russian imperialism is a feudal, militaristic imperialism. (...) There is no imperialism which is cruder, more barbaric, and bloodier than Russian imperialism.” ^[23]

 

“The last third of the nineteenth century saw the transition to the new, imperialist era. Finance capital not of one, but of several, though very few, Great Powers enjoys a monopoly. (In Japan and Russia the monopoly of military power, vast territories, or special facilities for robbing minority nationalities, China, etc., partly supplements, partly takes the place of, the monopoly of modern, up-to-date finance capital.)” ^[24]

 

“Such was the situation formerly, such it was prior to the war, when imperialist England still had rivals in the rapacious German, French, and Russian imperialists, when she did not yet dare to clamp her paws on all the countries of the East, fearing that she might receive a blow on her extended paws from some rapacious rival.” [25]

 

„… even in peace time Russia set a world record for the oppression of nations with an imperialism that is much more crude, medieval, economically backward and militarily bureaucratic.“ ^[26]

 

„The character of this war between the bourgeois and imperialist Great Powers would not change a jot were the military-autocratic and feudal imperialism to be swept away in one of these countries. That is because, in such conditions, a purely bourgeois imperialism would not vanish, but would only gain strength.“ ^[27]

 

“Capitalism is private ownership of the means of production, and anarchy in production. To advocate a “just” division of income on such a basis is sheer Proudhonism, stupid philistinism. No division can be effected otherwise than in “proportion to strength”, and strength changes with the course of economic development. Following 1871, the rate of Germany’s accession of strength was three or four times as rapid as that of Britain and France, and of Japan about ten times as rapid as Russia’s. There is and there can be no other way of testing the real might of a capitalist state than by war. War does not contradict the fundamentals of private property—on the contrary, it is a direct and inevitable outcome of those fundamentals. Under capitalism the smooth economic growth of individual enterprises or individual states is impossible. Under capitalism, there are no other means of restoring the periodically disturbed equilibrium than crises in industry and wars in politics.” ^[28]

 

We could provide many more quotes which all demonstrate the same: While Lenin, Trotsky and the Bolsheviks were fully aware of the important role of the absolutist Tsar regime and the consequences for the specific, combined character of the Russian state (fusing semi-feudal and capitalist elements), they unambiguously insisted on Russia’s character as an imperialist Great Power (and not a semi-colony)!

 

Let us give another example: A few weeks after the February Revolution in Russia in 1917, when the autocratic Tsar regime was overthrown and replaced by the bourgeois-liberal popular front government, Trotsky characterized the latter as a “liberal imperialistic government”. He described the continuity, changes and transition of Russian imperialism from the years 1905-07 (when the régime of June 3^rd came to power) to 1917 in the following way:

 

“The capitalist classes, reconciled with the régime of June 3rd, turned their attention to the usurpation of foreign markets. A new era of Russian imperialism ensues, an imperialism accompanied by a disorderly financial and military system and by insatiable appetites. Gutchkov, the present War Minister, was formerly a member of the Committee on National Defense, helping to make the army and the navy complete. Milukov, the present Minister of Foreign Affairs, worked out a program of world conquests which he advocated on his trips to Europe. Russian imperialism and his Octobrist and Cadet representatives bear a great part of the responsibility for the present war. By the grace of the Revolution which they had not wanted and which they had fought, Gutchkov and Milukov are now in power. (...) This transition from an imperialism of the dynasty and the nobility to an imperialism of a purely bourgeois character, can never reconcile the Russian proletariat to the war.” [29]

 

As we see, Trotsky does not speak about a semi-colonial Russia but about an imperialist Russia. He characterized the liberal Provisional Government in March 1917 as representing “an imperialism of purely bourgeois character”.

 

How do the PO/CRFI comrades reconcile this with their view that Russia was a semi-colony? Do they want to suggest that Russia was a semi-colony as long as the Tsar ruled and then, between February and October 1917, it suddenly would have become an imperialist state? Leaving aside that this would be a) absurd and b) in contradiction to what the Bolsheviks said, it would also contradict the method of the PO/CRFI itself. The comrades insist, as we have shown above, that Russia did not meet the criteria of Lenin’s theory of imperialism (“emphases on monopoly capitalism, finance-capital, and capital export”). This had not, and could hardly have, changed in February/March 1917!

 

So how does PO/CRFI explain Trotsky assessment of Russia as a “purely bourgeois imperialism” in March 1917? Is it not much more logical, as we always have argued, that Russia was in essence an imperialist Great Power already before 1917 (similarly like Austria-Hungary, Japan, Italy, etc.) and that the February Revolution, resulting in the overthrow of the Tsarist autocracy, led to an important change in the political superstructure of Russian capitalism but not in its economic basis?! [30]

 

In fact, the PO/CRFI is not the inventor of the idea that Russia before 1917 was not an imperialist power but rather a “semi-colony”. While this thesis was roundly rejected by Russian Marxists in the time of Lenin and Trotsky, it originated among the Stalinists in the 1930s.

 

As we have already noted in the past, it was the notorious “theory” of Stalin in the 1930s which declared that Russia before 1917 was not an imperialist power but rather a “semi-colony”. Such he instructed the Russian historians to rewrite the Marxist analysis of Russia’s class character. [31]

 

“That Russia entered the imperialist war on the side of the Entente, on the side of France and Great Britain, was not accidental. It should be borne in mind that before 1914 the most important branches of Russian industry were in the hands of foreign capitalists, chiefly those of France, Great Britain and Belgium, that is, the Entente countries. The most important of Russia’s metal works were in the hands of French capitalists. In all, about three-quarters (72 per cent) of the metal industry depended on foreign capital. The same was true of the coal industry of the Donetz Basin. Oilfields owned by British and French capital accounted for about half the oil output of the country. A considerable part of the profits of Russian industry flowed into foreign banks, chiefly British and French. All these circumstances, in addition to the thousands of millions borrowed by the tsar from France and Britain in loans, chained tsardom to British and French imperialism and converted Russia into a tributary, a semi-colony of these countries.” [32]

 

Naturally, this Stalinist view was in contradiction to the positions of de facto all Marxist historians who participated in the lively discussion about the character of Tsarist Russia which took place in the Soviet Union in the 1920s. [33] It should be noted that M.N. Pokrovsky, an outstanding Russian Marxist historian and the leading figure of Soviet historiography in the 1920s, enabled a fruitful discussion among various historians and made himself important contributions for the understanding of Russia’s history (irrespective of his methodological weakness which Trotsky pointed out). [34]

 

The PO/CRFI comrades fail to understand that the law of uneven and combined development resulted in a contradictory development and nature of Russia as a backward, imperialist power. It was this law which allowed the Bolsheviks to explain why Russian imperialism combined both modern as well as backward-absolutist (tsarist autocracy) features of imperialism.

 

This whole question is not limited to Tsarist Russia. As we said above, there existed also other backward imperialist powers at that time like Japan, Italy or Austria-Hungary. Lenin and Trotsky considered these powers, despite their economic backwardness, as imperialist. They were fully aware of the uneven character of their economic and political development.

 

We demonstrated already above Lenin’s assessment of Japan as an imperialist Great Power. Here is another quote of Trotsky:

 

“Japan is today the weakest link in the imperialist chain. Her financial and military superstructure rests on a foundation of semi-feudal agrarian barbarism. Periodical explosions within the Japanese army are only a reflection of the intolerable tension of social contradictions in the country. The regime as a whole maintains itself only through the dynamics of military seizures. (…) But Japanese aggression is interlaced with traditionalism. While creating a gigantic fleet of the most modern type, the Japanese imperialists prefer to base their activities on ancient national traditions. Just as priests put their pronouncements and desires into the mouths of deities, so the Japanese imperialists palm off their very modern plans and combinations as the will of the august progenitors of the reigning Emperor. Similarly Tanaka covered up the imperialist aspirations of the ruling cliques by reference to a non-existing testament of an Emperor.” ^[35]

 

Lenin dedicated a whole article on Italian imperialism in 1915. Fully aware of its backward character (there was hardly any Italian capital export and no migrants coming to Italy but rather the other way round), he nevertheless insisted on the imperialist character of the Italian state.

 

“Italian imperialism has been called “poor people’s imperialism” (l’imperialismo della povera gente), because of the country’s poverty and the utter destitution of the masses of Italian emigrants.”

 

Hence, he emphasized that “internationalist socialists of Italy” have to “oppose a war which in fact is being waged for the imperialist interests of the Italian bourgeoisie.” [36]

 

How do the PO/CRFI comrades explain all this? They can’t since it is obvious the case that Lenin and Trotsky viewed not only those powers as imperialist (and not as semi-colonial) which were strong in terms of capital export and finance capital but also other, more backward states. In contrast to the PO/CRFI, the Bolsheviks approached this issue in a dialectical way, taking into account the totality of political, economic and military factors which characterized the relations of such Great Powers and oppressed nations.

 

In summary, we have demonstrated that PO/CRFI changes the view of Lenin and Trotsky on Russian imperialism in its opposite and totally distort their dialectical method. It is hardly surprising that PO/CRFI is equally incapable to understand the imperialist character of Russia and China today.

 

 

 

Russia’s and China’s Capital Export: Myth and Reality

 

 

 

The PO/CRFI author writes under the chapter heading “What defines the character of the Russian and Chinese economies: Export of commodities or export of capital?”: “Imperialism is a stage of capitalism in which the export of capital, rather than that of commodities, becomes determinant.” As we will see, this is a key statement in the argument of the PO/CRFI which the comrades distort from a feature of the world imperialist system into a caricatural criterion to characterize individual countries. But let us first continue with the quote:

 

“In the 21st century, the export of capital has become easier both technically and technologically. The neoliberal attacks of imperialism have, over time, considerably dismantled the barriers in front of the circulation of capital. The export of capital under these circumstances is not limited to a handful of imperialist powers but has rather become more widespread. Moreover, the deepening integration of the imperialist world has led to an increase in the export of capital among imperialist economies and the US and Britain now receive a high level of direct foreign investment, as well as being leaders in the export of capital as major imperialist powers. That the levels of investment the US and Britain export and receive, each, are approximately the same does not change the imperialist characteristic of the finance-capital of these countries. On the contrary, they are at the center of an increasingly integrating world capitalist system.

 

Imperialist countries such as Germany, France and the Netherlands, plus the European Union as a whole and Japan are net capital exporters in terms of the foreign direct investment stock. On the other hand, Russia and China are net capital importers in terms of the foreign direct investment stock. Whereas the stock of the foreign direct investment of China is equal to 24 per cent of its GDP, its export of capital reaches only 12 per cent of its GDP. This percentage, for Russia, is respectively 30 per cent and 26 per cent, and this despite it being the unrivalled number one exporter of capital to the former Soviet republics, which demonstrates that it is also a net capital importer.

 

A close scrutiny of both China and Russia shows that the character of their economies is defined not by the export of capital but by the export of commodities. The situation of Russia is quite obvious. 40 percent of Russia’s budget income stems from oil, gas and their derivatives. Its economic performance is highly dependent on the fluctuation of oil prices. On a global scale, however, Russia with its total export income of 353 billion dollars is at the bottom of the league of exporting countries, competing with the United Arab Emirates. For this reason, we shall not discuss further the situation of Russia due to the clarity of its position, whereas China’s situation seems to be more controversial and deserves to be evaluated in more detail.

 

With an income to the amount of 2.3 trillion dollars from its export of commodities, China is at the top of the league of exporters. If we add the 550 million dollars of Hong Kong’s exports to this figure, China’s export income stands at twice the export income of countries such as the US (1.5 trillion) or Germany (1.4 trillion). Our point is that the export of capital from China is complimentary to the country’s gigantic commodity-exporting economic structure. In other words, the Chinese economy exports both goods and capital but what is determinant in the Chinese case is the export of commodities, not imperialism’s distinctive feature of the export of capital.” [37]

 

“Unlike their American, German, French and Japanese counterparts, neither Russia with its oil and gas monopolies, its state banks as well as its ever-growing oligarchs due to the plundering of the workers’ state, nor China with its giant but premature finance-capital can form the basis for an imperialist power. However, such a conclusion does not imply that the current situation will remain the same forever. Even though Russian finance-capital is far from having an imperialist character, the development of Chinese finance-capital requires close scrutiny. Nonetheless, we cannot talk about imperialism unless China elevates its economy to a new level in which the export of capital, not the export of commodities, becomes dominant.” [38]

 

Every single paragraph represents violation either of the Marxist method, of simple logic or of bare figures. Let us deal with the main mistakes point by point. As he have already stated, the PO/CRFI’s method suffers from its complete lack of dialectic which characterizes the law of uneven and combined development. From the general truth – that in the epoch of imperialism capital export becomes more important than commodity export – the comrades wrongly conclude that powers can be qualified as imperialist only if their capital export is substantially larger than their commodity export. However, this was never the method of Lenin and Trotsky and for good reason.

 

A larger role of capital export, compared with commodity export, is often the case for advanced, long-time imperialist powers but not necessarily for backward powers or for newcomers. Japan, which for example was such a backward Great Power with significant semi-feudal characteristics, had a share of only 0.1% of the global stock of outward foreign direct investment in 1914. [39] Nevertheless, Lenin and Trotsky considered it at that time as an imperialist state.

 

Likewise, as we have shown above there always existed an uneven development among the Great Powers in general and even the Western imperialist states. Britain was the dominant capital exporter by 1914 with 41% of all global foreign direct investment! In Germany, certainly also an imperialist power at that time, capital export did not play a larger role than its commodity trade. And in the case of the United States we see a picture where commodity production and trade played a significantly larger role than its capital export.

 

As we said above, to a certain degree the U.S. was at the beginning of the 20^th century in a similar position like China has been in the past decade. It was a newcomer and its capital export lagged behind the established imperialist powers. Until 1914, US imperialism received more than double as much investment from foreign sources as U.S. nationals invested abroad. In the logic of the PO/CRFI, the U.S. in 1914 would not have qualified as an imperialist power.

 

In fact, both – the U.S. as well as Britain – were imperialist Great Powers. This is an example for the uneven development between the imperialist powers. However, if Lenin would have adopted the sterile and one-sided method of the PO/CRFI, he could have never characterized the U.S. as imperialists. We do not assume that the PO/CRFI holds such a position but this is the inevitable consequence of their distorted interpretation of Lenin’s theory of imperialism.

 

Furthermore, the PO/CRFI’s approach ignores the fundamental fact that a significant role of a country in the world’s commodity trade can simply reflect the fact that it is an important homeland of capitalist value production. This, in turn, usually is an indicator of capitalist economic power.

 

Let us move further. In several cases, the PO/CRFI author uses inaccurate figures. For example, it is not true that China exports significantly less capital than it imports. While this was indeed the case in the early period of capitalist restoration, it is no longer the case. The figures from the annual UNCTAD World Investment Report, the most authoritative source in this field, demonstrate very clearly the rapid catch-up process of China in terms of capital export. In Table 25 we can see that China’s foreign investment has increased so much in the last decade that its outward FDI stock already equals its inward FDI stock today.

 

 

 

Table 25. China’s Foreign Direct Investment (in Million US-Dollars), 2000-2017 [40]

 

                FDI inward stock                                                                               FDI outward stock

 

2000                       2010                       2017                                       2000                       2010                       2017

 

193,348                 587,817                 1,490,933                              27,768                   317,211                 1,482,020

 

 

 

Germany is another example demonstrating the absurd character of the PO/CRFI argument that a country could not be imperialist if its capital export is not more important than its commodity export. As we have shown above Germany’s share in world merchandise exports is 8.4% (2017) while its share in global FDI outflows as well as stocks is significantly less (5.6% respectively 5.2% in the same year). Following the undialectical PO/CRFI method, we could not characterize Germany as an imperialist Great Power.

 

It is worth noting that even the oldest imperialist Great Powers contradict the criteria of PO/CRFI. Britain, the world’s oldest imperialist state, not only has a FDI stock of the same size like China. It also imports slightly more capital than it exports! According to the latest UNCTAD figures, Britain’s Inward FDI stock is $1,563,867 Mil. and its Outward FDI stock is $1,531,683. The same proportion between Inward and Outward FDI stock exists for the United States: $7,807,032 respectively $7,799,045. As we see, the whole PO/CRFI theory is based on nonsensical arguments, distortion of the Marxist theory and false figures!

 

 

 

On the Character of China’s Foreign Investments

 

 

 

Let us move to the next attempt of the PO/CRFI author to save their failing theory. “While 40% of Chinese direct capital export concentrates on the mining, oil and energy sectors, only 4% of it goes to manufacturing industry. China is one of the major customers of raw materials and energy and this demand emerges out of export-oriented production within the borders of China, that is, out of the impetus for the export of commodities. The determinant variable in China’s direct investments abroad is the national income of the country into which the Chinese capital is exported. Foreign investments of China target not cheap labor but large markets. Large markets mean more demand for Chinese goods, which demonstrates that the export of Chinese capital is an extension of its export of commodities and that this characteristic of the Chinese economy cannot be defined as an indicator of imperialism.” [41]

 

Again, one confusion follows the other. The author notes that China’s capital export has a focus on the mining, oil and energy sectors and suggests that this would be an indicator for China’s non-imperialist character. (By the way, he makes a similar remark concerning Russia in the quote we reproduced above.) It is difficult to follow this logic – to put it diplomatically. Can it be the case the PO/CRFI author is not aware that oil, gas and the whole energy sector is a crucial part of the capitalist world economy?

 

This is true not only for semi-colonial but also for imperialist countries. According to a recently published study, energy (and hence any price fluctuations of it) affects over 60% of the total production costs in France. [42] Among the top 10 companies on the Fortune Global 500 list of year 2018 six were operating in the energy sector (and two others in the automobile sector which is strongly affected by energy prices). The whole history of world capitalism is marked by the important role of the energy sector (one just has to remember the role of the oil barons in the U.S. history)!

 

The author mentions that Russia’s budget is influenced by changes of oil and gas prices on the world market. True. He only fails to mention that not only Russia’s but the whole world economy is influenced by the fluctuations of for oil and gas prices because of the central role of this sector for the world economy. There have been global recessions in the past decades which have been triggered (or at least fastened) because of rises of the oil price.

 

Furthermore, have the PO/CRFI comrades forgotten that Lenin himself named the search for raw materials one of the five key characteristics of imperialism?! As we quoted above, he wrote in his key essay on imperialism: „We have to begin with as precise and full a definition of imperialism as possible. Imperialism is a specific historical stage of capitalism. Its specific character is threefold: imperialism is monopoly capitalism; parasitic, or decaying capitalism; moribund capitalism. The supplanting of free competition by monopoly is the fundamental economic feature, the quintessence of imperialism. Monopoly manifests itself in five principal forms: (…) (3) seizure of the sources of raw material by the trusts and the financial oligarchy…“ ^[43]

 

In short, we can not understand why the PO/CRFI author interprets China’s strong capital export in the energy sector as an indicator to disprove its imperialist character!

 

Let’s move ahead. The author claims. “Foreign investments of China target not cheap labor but large markets.” Really?! We have shown in past studies that China has become a leading investor in many semi-colonial countries. In 2010 China became the third-largest investor in Latin America behind the US and the Netherlands. [44] According to a study from McKinsey Chinese corporations already play a dominant role in Africa. About 10,000 Chinese corporations (90% of which are private capitalist firms) operate in Africa. They control about 12% of the continent’s total industrial production and about half of Africa’s internationally contracted construction market. In Africa, China is also a leader in “green field investment” (i.e., when a parent company begins a new venture by constructing new facilities outside of its home country); in 2015-16, China invested USD 38.4 billion (24% of total green field investment in Africa). [45] Furthermore, China is a leading foreign investor in many Asian countries.

 

Certainly, we do not deny that China’s corporations are interested in access to “large markets.” This seems to us a pretty common desire for capitalists – despite the fact that the PO/CRFI leaders want to convince us that capitalism still has not been restored in China! As far as we know, there are also many Western imperialist corporations which are interested in access to “large markets.”

 

In fact, searching for raw materials, for new markets, etc. has always been a feature of imperialist monopolies. Lenin already wrote about this in his book on imperialism: “We have seen that in its economic essence imperialism is monopoly capitalism. (...) We must take special note of the four principal types of monopoly, or principal manifestations of monopoly capitalism, which are characteristic of the epoch we are examining. (...) Fourthly, monopoly has grown out of colonial policy. To the numerous “old” motives of colonial policy, finance capital has added the struggle for the sources of raw materials, for the export of capital, for spheres of influence, i.e., for spheres for profitable deals, concessions, monopoly profits and so on, economic territory in general.” [46]

 

Anyway, does the PO/CRFI author seriously want to suggest that Chinese capitalists are not exploiting cheap labor force in these countries?! Who is working in all those enterprises? True, some Chinese corporations bring their own labor force but this is hardly the case for the majority of their foreign investments!

 

Another attempt of the PO/CRFI author to relativize the role of China’s capital export is his reference to the so-called “round tripping” – i.e. the transfer of money from mainland China to Hong Kong and then back to mainland China so that it will be classified as “foreign investment” (i.e. gaining from tax privileges etc.).

 

“There is also a serious source of misunderstanding regarding the data on the Chinese export of capital. When Hong Kong, a former British colony, was turned over to China in 1997, China and Britain made an agreement known as ‘one country, two systems’, according to which the free market and the liberal structure of Hong Kong earned immunity. For this reason, investments of China in Hong Kong are calculated as part of China’s capital export. Additionally, foreign investments of Hong Kong in China are in the status of foreign capital. China offers many incentives so as to attract foreign investment. For this reason, the Chinese capital that starts a business in Hong Kong returns to China (“round tripping”) and takes advantage of the incentives provided for foreign investment. The share of Hong Kong in the export of Chinese capital reaches 70 per cent and the capital that is re-invested in China as a result of round tripping is estimated to reach 40 per cent of the export of Chinese capital.”[47]

 

We have already dealt with this phenomenon in past works (and also pointed to a similar situation in Russia). Here, again, the author has not thought through the issue. First, one consequence of the “overstated” figures for China’s capital export (since they in fact are re-invested in China via Hong Kong) is that it is not only the figures for capital export which are overstated but, consequently, China’s figures for capital import are overstated too. This means that the role of foreign imperialist capital in China is not as big as various revisionists (including those of PO/CRFI) often claim.

 

But irrespective of this, there is a more fundamental issue involved. It is a widespread myth, usually claimed by Western media, that sending money abroad to tax havens and re-investing it as “foreign capital” would be peculiarity of China (and Russia). As a matter of fact, this is not true. Such is a standard practice in nearly all capitalist countries – including the Western imperialist ones.

 

As we pointed out in past studies, transferring money to offshore countries also constitutes a significant share of the ostensible FDI of Western imperialists. According to a study, “at least 30% of global FDI stock is intermediated through tax havens.” [48] Gabriel Zucman, a disciple of Thomas Piketty (“Capital in the Twenty-First Century”) published a study calculating that, as of 2008, about $5.9 trillion in financial wealth (i.e., excluding works of art and real estate) were kept in tax havens by the global rich. [49] The Tax Justice Network puts the figure higher at $21 to $32 trillion as of 2010. [50] In Figure 29 we see the massively increasing volume of profits which U.S. corporations formally get from foreign direct investment in offshore financial centers. So we see, again, that the arguments of PO/CRFI against China being an imperialist power are built on sand.

 

 

 

Figure 29. Income of the United States on direct investment abroad, selected countries, first quarter 2000 to first quarter 2018 (Billions of dollars) [51]

 

 

 

 

 

 

 

State-Owned Corporations in China and Russia: Not Capitalist?

 

 

 

Let’s deal with the next argument of PO/CRFI. The comrades are forced to admit “that finance-capital, characteristic of the age of imperialism, exists in Russia and China.” But they make an important relativization which supposedly undermines the thesis that China and Russia are imperialist states: “However, almost all of those companies are either state-owned corporations or joint-stock companies in which the state is the main share-holder.”

 

“Three petroleum and natural gas giants, Gasprom, Lukoil and Rosneft, and two publicly traded national banks, Sberbank and VTB Bank, are the Russian companies which are amongst the world’s biggest 500 companies list. China, on the other hand, enters the list as one of the leading countries, with approximately 20 companies in the top 500 list. Thus, if we add the increasing stock market activity in both China and Russia to the increasing importance of the banks’ capital, we can easily say that finance-capital, characteristic of the age of imperialism, exists in Russia and China. However, almost all of those companies are either state-owned corporations or joint-stock companies in which the state is the main share-holder. The only private Chinese company which made it to the list is the Hong-Kong based Noble Group, which is in fact a British company founded by a big coal trader named Richard Elman. The reason why those companies are among the top 500 in the world is not the developed capitalism of China and Russia, but Russian leadership in natural resources and China’s huge market due to the fact that it has the biggest population in the world” [52]

 

We note in passing that, unfortunately, the comrades don’t recognize the irony implied in this statement: despite admitting the existence of finance capital, the PO/CRFI insists that capitalism still has not been restored in these countries! But unintended self-mockery is certainly not the biggest misfortune of the comrades! In fact, the PO/CRFI’s assertion reveals that it is unaware of Lenin’s thesis of “state monopoly capitalism”. In his theory of imperialism, Lenin stated that advanced capitalism, in the age of its decline, is increasingly characterized by a central role of the state. This results in the increasing role of state (or partly state) corporations, indirect state intervention in the economy, etc.

 

„The question of the state is now acquiring particular importance both in theory and in practical politics. The imperialist war has immensely accelerated and intensified the process of transformation of monopoly capitalism into state-monopoly capitalism.“ [53]

 

“That capitalism in Russia has also become monopoly capitalism is sufficiently attested by the examples of the Produgol, the Prodamet, the Sugar Syndicate, etc. This Sugar Syndicate is an object-lesson in the way monopoly capitalism develops into state-monopoly capitalism. And what is the state? It is an organisation of the ruling class…” [54]

 

It is a widespread myth of neo-liberalism to claim that state-owned corporations could not operate profitable. As we have demonstrated in past studies, China’s state-owned enterprises underwent massive restructuring, mass lay-offs, abolishing of social benefits so that, as a result, the majority of them make profit since years. According to China’s official statistics, the state-owned enterprises “posted their best profitability performance in 2018, even as the country's GDP growth has slowed, as initial reforms yielded results and provided solid support to the world's second-largest economy. In 2018, aggregate revenues of the country's nearly 100 centrally administered SOEs increased 10.1 percent year-on-year to 29.1 trillion yuan ($4.29 trillion). (...) Profit growth was even better, reaching 1.7 trillion yuan with an increase of 16.7 percent, the best results since these figures were first collected, according to SASAC spokesperson Peng Huagang.” [55]

 

And the Western capitalists themselves have to admit this implicitly when they include numerous state or semi-state owned corporations in the annual Global Fortune 500 list. We remind our readers to the UNCTAD study quoted above which reports that the Chinese corporations (many of the state-owned) among the largest 2,000 Transnational Corporations take 17% of all profits of these top monopolies! So, obviously, the Chinese state-owned corporations operate pretty profitable!

 

 

 

The Role of Migration

 

 

 

Let us now deal with the last argument of PO/CRFI why Russia and China supposedly are not imperialist powers. The author claims that China is not an imperialist country because there is no migration to China where such migrant workers would be super-exploited as cheap labor.

 

“Additionally, it is impossible for China to rise up to the league of imperialist countries as long as it does not seek cheap labor beyond its borders, but continues to offer wages among the lowest in the world and remains a country into which capital flows and out of which its own population moves. In connection with this, we must mention that Lenin also added the phenomenon of migration to the indicators of imperialism: “One of the special features of imperialism connected with the facts I am describing, is the decline in emigration from imperialist countries and the increase in immigration into these countries from the more backward countries where lower wages are paid.” In today’s world if there is no such thing as American, German, Danish, Dutch, Canadian, British or French migrant workers, the reason is that these countries are imperialist powers. And the converse relation must also be taken to be true.” [56]

 

The first sentence is simply nonsense as we have shown. Yes, capital flows into China (as it is also flowing into many North American and European imperialist countries). But a lot of capital also flows out of China as foreign investment of Chinese corporations. This is why they are among the leading foreign investors in Africa, Asia and Latin America. Contrary to the PO/CRFI myth, these corporations are exploiting the local, cheap labor forces. The author seems to suggest that there is a significant emigration of Chinese people from China to other countries. This might be a mistake in the translation of the text (which was probably written in Turkish). If it is not a translation mistake, it is simple nonsense. There is no significant migration from China to other countries.

 

The only thing which is true is that there is indeed little migration to China. But before dealing with this issue, we want to draw attention to the fact that the author furtively left out the case of Russia. This is most likely the case because PO/CRFI also denies the imperialist character of Russia. Nevertheless, as we have shown in past studies, Russian imperialism enormously gains from super-exploitation of migrants. According to official statistics approximately 11.6 million legal migrants currently reside inside Russia. In addition, another 5-8 million migrants have illegally entered the country in order to work there. The official figure for the migrants’ share of Russia’s population is 8.1%, which is close to levels in various European countries. However, this appears to be an underestimation. Most of these migrants come from Central Asia and Caucasus. In addition, this figure does not include the migrants from oppressed nations within Russia. [57]

 

In general, the author is right to say that migration plays an important role in imperialist countries. In fact, this is a central feature of imperialism particularly in the current historic period of its decay. [58] However, it is useful to bear in mind that there are exceptions and not every imperialist country experiences substantial migration. This is, for example, the case with Japan, one of the strongest imperialist powers in the world. Japan has only a small share of migrants among its population (1.7% in 2007). [59]

 

The case of China has its peculiarities as we have pointed out in past studies. The Stalinist-capitalist ruling class utilizes effectively the sheer size of the country’s population – China’s 1.4 billion people are the equivalent to 18.5% of the total world population! Furthermore, it utilizes the old household registration system which was set up by the Stalinist bureaucracy in 1958. According to this system (called hukou in China) “residents were not allowed to work or live outside the administrative boundaries of their household registration without approval of the authorities. Once they left their place of registration, they would also leave behind all of their rights and benefits. For the purpose of surveillance, everyone, including temporary residents in transit, was required to register with the police of their place of residence and their temporary residence. By the 1970s, the system became so rigid that ‘peasants could be arrested just for entering cities’.” ^[60]

 

Given rural poverty and opportunities for jobs in the cities, millions and millions of rural, mostly young, peasants moved to the cities to find employment. These former peasants or peasant youth who moved to the cities are called migrants in China. This category is misleading since it is usually used for people who move to another country. In fact they are rural-to-urban migrant workers. However it is no accident that these people are called migrants, because there is an important similarity between them and those who internationally are called migrants: they move to areas where they live often illegal and without rights and claim to social security. So these former rural people move to the cities where they are often illegal and – because of the hukou- system – have no access to housing, employment, education, medical services and social security.

 

Living in very poor conditions, these migrants soon became a major driving force for the capitalist process of primitive accumulation via of super-exploitation. The number of migrant workers in China rose from about 30 million (1989), to 62 million (1993), 131.8 million (2006) and by the end of 2010, their number rose to an estimated 242 million. In the capital city, Beijing, about 40% of the total population are migrant workers, while in Shenzhen nearly 12 million of the total 14 million population are migrants. These migrant workers are usually pushed into hard-labor, low-wage jobs. According to the China Labour Bulletin, migrants made up 58% of all workers in the industry and 52% in the service sector in 2008. The proportion of migrant workers in manufacturing industries and in construction reached as high as 68% and 80% respectively. ^[61]

 

According to another study rural-to-urban migrant workers have also become the largest proportion of the workforce, making up some two-thirds of all non-agricultural workers. They have become dominant in a number of major sectors: 90% in construction, 80% in mining and extraction, 60% in textiles and 50% in urban service trades.

 

In short, Chinese imperialism does not need to important migrants because it is already in a position to super-exploit vast human resources of cheap labor. In fact, this system of super-exploiting internal migrants is one of the sources for the rapid process of capital accumulation which resulted in the rise of Chinese capitalism. The PO/CRFI comrades are therefore completely wrong to conclude form China’s lack of migration that this would reflect China’s non-imperialism.

 

In summary, the analysis of PO/CRFI fails to grasp the nature of capitalism in China and Russia and, consequently, fails to understand its character as emerging imperialist powers. From this follows the failure of this organization to understand the nature of the Great Power rivalry in the present historic period. [62]