BURGEONING CHINA’S STATE CAPITALISM (State Capitalsim 으로 춘추전국시대 꿈꾸는 중국) Oct 9, 2022 at the hill of Yang Han Jeong, Catskill Mtn.
Professor Robert Heilbroner, my mentor at graduate school, in his famous book “The Worldly Philosophers” elucidated the inexorable world of Karl Marx in 1961.
The communist Manifesto Karl Marx declared opens with portentous words” A Spectre is haunting Europe- The Spectre of Communism: the year 1846 was a year of horror for the old order on the continent. “Their ends can be attained only by the forceful overthrow of all existing social relations.” Though Marx made a wrong prediction in predicting that capitalism must inevitably and necessarily collapse, his scientific prognostication led to the strong foundation for communism to build its edifice. Marx statue in the Northgate cemetery, north of London is very symbolic enough to welcome ever-increasing tourists including myself, because of his revolutionary Das Capital that transformed Hegel’s spiritual dilectism into material one. J.S. Mill deserves credit for his invention of the word Communist Manifesto in his great book on economics published in 1848 with its message of progress and the opportunity for peaceful change and betterment.
Marx’s analysis on the capital accumulation and distribution, and distribution of surplus value specifically pinpoints implications on the concentration of capital in his Kapital III that is the dominant method, by which the use of ever increasing sizes of capital is organized. This presuppose an advanced credit system, without credit, accumulation of capital in production can not achieve productivity increase, consequently a divergence between the accumulation in production and capital in the financial system is created. This is fictitious capital and can lead to the intensification of economic crisis when accumulation fails to overcome the obstacles confronting the continuous expansion of the production of surplus value. The concentration of capital and the uneven pace of accumulation itself are to be associated with uneven development of economics and society. Accumulation process is never simply an economic process but also involves general development of social relations including colonialism and imperialism. And the changing roles of the state help accumulate the intensification of contradictions of capitalism.
China, head of global communism, is now aggressively spreading globally the Marxian doctrine with the power of state capitalism. Beijing has been the lender of choice for many poor nations over the past decades, doling out funds for government to build bullet trains, hydroelectric dams, airports and super highways. She was a leading player in the global stage of civilization by implementing urbanization program and an international trade. With the discovery of America by Christopher Columbus in 1492, the world civilization began t move into European continent. Renaissance cultural revolution in Italy rapidly adopted the advanced culture Asian countries cultivated and transformed old culture into a new culture using science and technology imported from Asia. The fact that self-interest through fair competition will make individual rich and by the “ invisible hand” assuring an efficient allocation of resources, fair distribution of production are again challenged to reexamine in order to achieve the maximum welfare of mankind. 250 year old capitalism in western countries Adam Smith founded unexpectedly raised high unemployment rate, high inflation rate causing housing market to collapse with high mortgage rate resulting in credit crisis, and economic crisis. Economic recession due to high interest rate in every sector or economy affects consumer’s purchasing power, business investment and government expenditures on education, defense, science projects, welfare and nation’s infra structure.
As the free market system itself could not solve those problems, we are reappraising the state capitalism that communist China implement to replace the role of supply and demand function of market system. China is now playing a role of global banker to supply loans to poor countries in Africa, South America for social overhead infra structure such as building bridges, airports, hydroelectric dams, superhighways etc. In exchange for the supply of necessary loans, she rushes to control oil and gas pipelines from Turkmenistan to China and from South Sudan to the Red Sea, from Indian Ocean to the Chinese city of Kunming, running through Myanmar and from Siberia to Northern China. Huge hydroelectric projects like the Meroe dam on the Nile and in Sudan are the biggest Chinese engineering project. In Africa and Equator’s $2.5 billion Coca Codo, Sinclair dam. China already surpassed the U.S. as the world’s biggest trading nation in 2012, and declared the leading trading partner of countries like Australia, Brazil, and Chile as it seeks economic resources like iron ore, soybeans and copper. Under the State capital system, China supports export industries and gives hidden subsidies and offer lower rate financing as well as providing needed liquidity. China increased foreign investment to more than $2 trillion in 2020. With this economic power, Chinese state run firms enjoy a major advantage over competitors. In global market, flooding the market with products well below market price, China consequently destroy industries in employment in the west and elsewhere. This is real threat to US and other countries.
In Canada, China got an approval for building keystone pipe project that president Obama refused t do the secure an export market for Canadian-crude oil reserve.
In Australia, Chinese total investments surpassed $50 billion, including heavy investment in mining industry.
In 2014, Argentina borrowed $4.7 billion from Chinese banker to build two hydroelectric dams. Countries like Sri Lanka, Pakistan, Kenya, Equator, Suriname, Zambia, all got benefits of borrowing loans from China.
Global economic recession could be worse by the higher inflation, high interest rate, low production in US and increasing number of default nations will speed up a vicious circle of poverty and more polarized distribution of income between the rich and the poor countries. To make the matter worse, as a result of global economic slow down, debt ratio to GDP increased to double, triple, ten times, more debt accumulation, further darkening the outlook of economic recovery. Increasing rate default of many poor countries is likely to flame the fire of global citizen’s anger and wrath. Communism gives all the reason to left wing politicians to go a big government and higher taxes to supplement government projects. As debt crisis deepens, lender will speed up foreclosure and default rate and inflation will make the rich richer and the poor poorer. Disparity of income polarization widens, state capitalist China may reschedule debt payment procedure and try to squeeze debt nations to accept an economic subjugation to lenders. Communism through state capitalism gradually steps into economic colonialism, imperialism as Karl Marx visioned. China’s state capitalism will prevail over capitalism and will further pursue Chinese imperialism. Communist Manifesto flies high and competition between the traditional market capitalism and state capitalism becomes fierce and the class struggle between bourgeoisie and proletariat burns deep, lifting high the communist Manifesto flag. Reviewing the history of economic thoughts,…..
Hubert Hojae Lee, Ph.D in economics.
Commissioner of Human Rights
Chairman of Korean American Foundation(https://kafusany.com)
Former advisor to president George Bush and Donald Trump
