AskProfWolff: Why has China's economy grown so much?

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[uuu]

you left out one major piece.


China's state capitalism achieved its central planning goals through the exploitation of cheap labor. Namely, bringing uneducated farmers into the city centers to work in factories and construction.


Cheap labor was used a "natural resource" in China's case.

[augurcybernaut]

Naaah..!! They have simply opened up retail consumer credit markets and have begun to syndicate tranches of bundled credit just like we have. Looking at % rate alone should be red flag to the listener that some funny stuff is going on.

[leonpse]

in China they get things done quickly. Building a subway takes a short time, a few years as compared to America where it takes a generation.. They get thing done, so they can start making money.

In America, they try to milk the system and take as long as possible to complete something. They try make as much money as possible while doing as little work as possible.

[kanalarchis]

Then why did the development not happen in Mao's days, when it was even more communistic than now? And why didn't China collapse like the USSR? I think the Marxist professor tries hard to miss the allowance of some private property in China. There are businessmen who employ workers in China, in private businesses. It's true, the government dictates a ton of things and interferes with the market still a lot, but not as much as before, that's why China has breathed lately. Because it was allowed a little capitalism and private property. And the rate of growth is explained by the rock bottom starting point. When you have been devastated by Mao, any improvement will be a large %. 5% growth in the US would be 10 times harder than 5% in China, because the US economy has already grown a lot over the last 200 years, in proportion to how much capitalism it has been allowed to enjoy cumulatively (not 100% capitalism by any means, and it's probably gotten worse lately, but still better than China, if you look at the cumulative effect of the last 200 years).

[TheGroovyJones]

QUESTION - That region of Italy whose economy is 40% worker owned and operated business: can you share any data about how that region fared through the 2008 crisis compared to greater Italy or EU? Any metrics to evaluate how hard it was hit, how quickly it recovered, or how it was able to leverage its differences with 99% capitalist areas to get the regular people in its community through the bad times with as little negative impact as possible?

Thank you for the free education and different perspective on the world. You and Mark Blyth are the first time economics has ever been fun to listen to. (Not just for me, I mean ever).

[tianyiliu]

As a leftist from China, I respect Prof. Wolff very much for his dedication to Marxian economics. As to worker co-op vs. planning, as far as I know, Prof. Wolff is NOT opposed to planning at all, and every reasonable person would agree that we need planning and regulation. That's point one.

Point two. I have to say that I don't think that China is a socialist economy. Zizek, who knows about China better than Wolff, said that the Chinese Communist leaders are the best CAPITALIST managers in the world (that is, in the 2007 crash, they managed to minimize their loss, etc etc). In fact, there is huge wealth inequality in China, and the reason why it exists, from my Marxist perspective, is precisely that, after Deng Xiaoping's reform, the means of production have been controlled in private hands again! (That's the reason why in Cultural Revolution Mao called Deng "one of the party leaders who takes the capitalist road". I know there are plenty of Chinese people who hate Cultural Revolution, and that is either because they are brainwashed by Deng and his followers, or because that they are the super rich under Deng's reform so that naturally they hate the egalitarian ideal.) In China, if you want to run a business, you get even less government regulation than in the US. You can evade taxation even easier than in any of the Western developed countries. As a businessman, you can have a banquet with the mayor of your city, and maybe marry your daughter with the mayor's son (everything Balzac portrayed), etc etc. And there are plenty of "progressive" economists (in China the communists/leftists are "conservatives"; those who love private enterprise are "progressive") in China, many of them being the students of Milton Freedman and other notorious far-right economists, who write articles on how much economic loss would we have if the government had more regulation on real estate market (The truth is that there are tens of millions of young people who cannot afford their housing). In general, I do not believe that the "socialism with Chinese characteristics" is true socialism. As Zizek said, this is a racist term, since socialism with Chinese characteristics has nothing to do with China, it is capitalism with an authoritarian face, i.e. fascism.

Point three. It's true that China has many huge-scale mass transportation projects. But as someone has pointed out, many train stations in China at rush hours are nightmarish. And the reason is that the gap of development between the rural and urban areas is too big! so that there are hundreds of millions of peasants who have no choice but to leave their hometown and work in a sweatshop in the coastal cities. Remember that in the Communist Manifesto, one of the ten policies that Marx and Engels would adapt is to reduce and finally close the gap of development between the rural and urban areas. The Chinese "Communist" leaders completely forget it, and again, as Zizek pointed, in China as well as in ex-Yugoslavia, virtually no party member would read Marx or Lenin any more, but they still claim that they are "Marxists". They're pretty much like those who do not read the Bible and still call themselves Christian.

In general, as Wolff said elsewhere and I agree with him, that China has got a huge progress after the success of 1949 revolution, but China is not and should not be our future. In terms of technological progress, China is successful. Right now China can build and produce almost any of the most sophisticated machines in the world (and the miserable third-world situation is that a country like Cambodia or Guatemala have no ability whatsoever to produce their own automobile, and thus they have to be involved in the unequal trade dominated by the hegemonic powers). But there are still huge internal problems in China, and the solution is still the communist/leftist one.

[naturada]

I don't at all get the impression that Wolff presents China's growth in a positive light like some of you guys in the comments...to me he seems quite neutral. An explanation of why a country has prospered and gained power is not equivalent to approval or endorsement. I think the mistake some of you may be making is confusing economic success for societal improvement--which, to be fair, we've all been taught are the same. In this video at least, Wolff is simply addressing the question, not making any holistic value judgments.

[limingh]

Oh.... well, that explanation seemed too simple

[MrSynfold]

I feel like you should also mention that those two nations were Feudal lands prior to their Red Revolutions and under Marxism, one must build up and meet the materialistic conditions of its people in order to properly transition into Socialism. The Theory of Dialectical Materialism states that it can take decades if not centuries in order to achieve full Socialism, so no China isn’t a Capitalist State, it is a state on the path of Socialism

[James]

Chinese economic success is due to capitalism but Chinese collapse will be the due to its centralized economic system.

[stevehartley]

China changed when it got back Hong Kong from the British! It saw the prosperity of a capitalist based economy and took that onboard! So you have a capitalist based economy governed by a communist government! This allows for economic growth, which is non dependent on pure capital investment! China has embarked on a 25 year economic growth policy! Investing in infrastructure on a massive scale! This has worked even more so than Europe etc where they have a level of social care, education and infrastructure! This is because in Europe governments can be affected by democratic changes in government every 4 to 5 years!

[jamiekloer]

China didn’t have unions mass regulation and it relies on mass consumption from America. When the west went bankrupt they went on a mass debt spree. They grew their banking system a thousand times. They printed more money than the rest of the world after 2008. They keep growing by issuing more debt. It now takes 4 dollars of debt for 1 dollar of GDP growth. They have the biggest private debt bubble in history. The government said lend and so they lent. The problem was most of the lending went to enterprise that went to overcapacity and over building.

[andym]

Why has China grown so quickly? Authoritarianism with their markets, playing both as a developed nation when it comes to economic power and as a “developing” country when it comes to regulation (environmental) and human/labor rights, zero accountability when it comes to international patient and intellectual property rights, and the massive availability of raw materials.

[yttean]

After viewing this video Prof. Wolff can you explain a rather similar economy like that from Venezuela FAILS miserably over the few years? I think it more to do with the people running the country rather than the type of economy it is in. An example, the US now is run by politicians whose ideals are rather different from their forefathers, being a capitalist system in the US is not that bad(it worked well over the last 200 years), by rather by those politicians running the system. If they do not fix the system it will also fail miserably.

[AntonioSalazar-dbeb]

I miss Mr Wolff expressing his moral stance on China's system.

[ridwanh]

Yeah that's all nice but how about economic development oh that's right

[andrewhubert]

They told you what you wanted and that's that.

[ennieminee]

“More efficiently”??? I think when looking through the lens of time one could argue that a natural market was much more sustainable and didn’t have to rely on forced economic adventures.

And the US had a much more rapid economic growth in terms of gdp that the USSR in the same time frame. And all the while the US was much more developed than the USSR so growth was much harder to achieve.

[sen]

This explanation is pretty off. China only developed faster in the last 25 year but the socialism was there (government owned and managed majority of the stuff) since 1949. If socialism was the answer, the economy would have taken off much earlier.

[gustav]

Obviously a command economy who focuses on employment and economic growth will achieve that.