The Hindu Business Line : China's transition: From Marx to Deng

OCTOBER marked the 55th Anniversary of the founding of the Peoples Republic of China. It coincided with birth centenary of Deng Xiaoping, the architect of China's integration with the global economy. China has reason to celebrate. It has a gross domestic product of $1,405 billion with a per capita income of $1,000. It hopes to double its GDP by 2010 and quadruple the same by 2020 when the Chinese economy would be a $4-trillion economy. By then, China would have overtaken the US.

The idea that China may become the world's biggest economy, with an enormous army of cheap workers, says the Economist of London, fills many in the rich Western World with dread.

China will be giving a boost to both global demand and supply. Its foreign exchange reserves have more than doubled since 2002 to over $480 billion, most of it in American government securities. Its currency is pegged to the dollar.

American economists have been arguing that US' current account deficit will be happily financed by China and other Asian countries for at least another decade. The present arrangement, they say, looks rather like a revived Bretton Woods, the system of fixed exchange rates that prevailed for a quarter of century after the Second World War.

China is also helping to keep global interest rates down. Till a quarter of a century back, what was predominantly an agricultural backward looking society has been transformed into a vibrant modern economy capable of challenging the mightiest of the superpowers. How did China achieve this?

Role of Deng Xiaoping

"The History of nations" said the British historian and essayist, Thomas Carlyle, "is but the story of its great men". The present supreme position of China owes much to the reforms introduced by Dieng Xiaoping who took over the reins of power after the demise of Chairman Mao Zedong.

In September 1982, Deng stunned China watchers with the formulation of "socialism with Chinese characteristics". His successor, Mr Jiang Zemin, coined the euphemistic phrase "Market Socialism" at the 14th Part Congress in October 1982.

By 1993, China had produced five million millionaires and two million stockholders. Commented The New York Times "The stock market experiment for China is in transition. It confirms the economic move towards capitalism".

China's average tariffs have fallen from 41 per cent in 1992 to 6 per cent after it joined the WTO in December 2001, giving it the lowest tariff protection level of any developing country. It has welcomed foreign direct investment in a big way. Joint ventures with foreign firms produce 27 per cent of China's industrial output.

Recently, the Chinese Constitution was amended to give guarantees to the holding of private property. All this raises the question whether China can be considered a communist state at all.

Disgusted at the way his theories were being misinterpreted in Germany, the philosopher, social scientist, historian and revolutionary, Karl Marx once famously declared that he was not a Marxist if the German interpretation of his followers were to be taken as correct.

Evolution of Marxist thought

The political and the economic creed of Marx had struck the world like a flaming religion. Property rights were anathema and even the family was considered a bourgeois institution for perpetuating property rights. "No matter what forms cover the Republic," declared Lenin, "though it be the most democratic republic, if it retains private ownership of land, factories, mills and if private capital holds entire society in hired slavery, that State is an apparatus for a oppression of some by others."

Marxism combined a Machiavellian materialism with a millennial righteousness. Lenin adopted the philosophy to a backward agrarian society in Russia. As the Supreme Leader of Soviet Russia, he instituted a New Economic Policy for Russia which was characterised as a strategic retreat from communism.

Stalin had broken away from Trotsky, giving up the theory of exporting revolutions and contenting himself to building up socialism in one country. Like Leon Trotsky, the Russian Marxist, Chairman Mao believed in the theory of permanent revolutions. While Lenin never believed in guerrilla fighting, Mao formulated the classic doctrine to show how to seize power:

"Enemy advances, we retreat; enemy camps, we harass, enemy tires, we attack; enemy retreats, we pursue". Lenin abhorred luxury and was personally committed to austerity and equality that harps back to original socialist principle. The present day Chinese rulers are made of softer stuff.

All this raises the fundamental question whether the Peoples Republic of China can be considered a Communist state at all. Is Deng really a reformer, visionary or innovator as made out to be? His notorious phrase of "Black Cat" or "White Cat" was always considered controversial.

Lessons for India

China has advanced far in the realm for liberalisation and globalisation. But, politically, it remains a tightly-controlled State in the hands of the Communist Party of China. If any one-party state can be considered as democratic, or communist, there will be several contenders for the dubious honour. From Marx to Deng, no Communist philosopher had appreciated a democratic republic with universal suffrage. In their opinion, such a State was the best instrument capitalist tyranny could possess.

Universal suffrage is not capable of expressing the will of the working class and insuring its realisation; but the bourgeoisie, taking advantage of the belief of the people that it does, can deceive them into believing themselves not exploited, can even deceive them into reaction against the proletarian social order.

The phenomenal achievements of the Peoples Republic of China may make people wonder whether Democratic India should emulate its giant across the Himalayas. Russia had achieved nothing by giving up Communism. The disorienting collapse of Communism has ushered the dark night of the Russian soul.

There is consolation for India from The Economist of London (October 2, 2004): "Looking two decades ahead, India will probably overtake China in the growth stakes because its population is younger and growing faster, so its workforce will continue to expand when China's ageing population will start to slow it down. Although far behind in opening up, one day India will reinforce China's beneficial effect on the global economy."

(The author is a former Chief Commissioner of Income-Tax.)