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Neoliberalism on china and beyond

Neoliberalism on china and beyond






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    Neoliberalism on china and beyond Neoliberalism on china and beyond Presentation Transcript

    • Neoliberalism on China and Beyond Literature review presentation for SOSC530 Lecture 11 Prepared by Sharon Wong
    • Here we go… • Neoliberalism “with Chinese Characteristics” • State Neoliberalism • Neoliberalism on Trial • Freedom’s Prospect
    • Neoliberalism “with Chinese Characteristics” • Historical Background • 1978 – political uncertainty due to Mao’s death • Several years of economic stagnation • Deng Xiaoping: ECONOMIC REFORMS! • Coincided with the turn to neoliberal solutions in the U.S. and the U.K.
    • What are the “Chinese Characteristics” • Incorporating neoliberal elements with authoritarian centralized control • Chile, South Korea, Taiwan, and Singapore already established the compatibility between authoritarianism and the capitalist market
    • How? • Bringing in Market Forces • Stimulating competition and introducing market pricing • Devolution of political-economic power to the regions & localities • avoid confrontation with traditional power centers in BJ • local initiatives could pioneer the way to a new social order • Opening-up to foreign trade and investment under strict state supervision • Putting an end to China’s isolation from the world market
    • Giving up Egalitarianism? • Negative! Claimed to be still a long-term goal! • But… individual and local initiative had to be unleashed • So as to... ↑ productivity and spark economic growth • Xiaokang (小康) & “Four Modernizations” (四个现代化) • Agriculture • Industry • Education • Science and Defense
    • Internal Transformations • Socialism with Chinese characteristics vis-à-vis Privatization with Chinese characteristics • State-manipulated market economy delivering spectacular economic growth and rising living standards for a significant proportion of the population > 20 yrs • State neoliberalization
    • So and Chu’s State Neoliberalism • Contrasting between China’s experience of neoliberalism, and that of the North • A highly contradictory term: • the party-state: communist and standing on the side of workers and peasants, • could not carry out all sorts of neoliberal policies to assault workers and peasants and undermine their interests
    • General Path • Singular and unique hold on power by the Communist Party; at the same time, embraced economic reforms • Amass wealth and upgrade its technological capacities • So as to • Better manage internal dissent and defend itself against external aggression • Project its power outwards onto its immediate geopolitical sphere of interest, i.e. East and South-East Asia
    • Situations before the late 1970s • Rural and urban dwellers were conferred to their own sector’s welfare benefits and rights  holding back any mass rural migration to the cities • Urban area: SOEs – State-owned enterprises • Reasonably profitable • Security of employment with wide range of welfare and pension benefits • The iron rice bowl 铁饭碗 • Rural area: Agrarian sector organized to a commune system • State-owned banks a depository for savings and provided investment moneys outside of the state budgets
    • In late 1970s and the 1980s (So and Chu’s State neoliberalism) • Decollectivization • dissolution of agriculture commune system to promote “Personal responsibility system” • Proletarianization of peasants • Marketization • created labor market • Fiscal decentralization and the weakening of the central state • bottom-up revenue-sharing system to build more independent and powerful local states • Opening up and spatial differentiation • open door policy toward foreign investments
    • In the 1980s – Dissolution of agricultural communes • Peasants were given the right to use communal lands under an individualized ‘personal responsibility system’ • could sell surpluses at free market prices • By the end of 1980s, could lease the land, hire in labor and sell their products at market prices • Township village enterprises (TVEs) were created out of the assets held by the communes and became centers of • Entrepreneurialism • Flexible labor practices • Open market competition
    • The establishments of TVEs • Constitution of December 1982 - causing the political and administrative powers turned over to newly created township and village governments • later those governments took possession of the communes’ industrial assets and restructured them as TVEs, allowed by legistlation
    • The TVEs • Capital sources • Savings by the initial surge in rural incomes • JV with foreign capital (particularly from HK or through the Chinese business diaspora) • Active in rural peripheries of areas liberated for foreign investment, e.g. Shanghai and Guangdong • Significances of TVEs • As proving grounds for reforms Gave dynamism in the economy during the first 15 years of the reform period (late 1980s to 1990s) • “Whatever worked with the TVEs could later become the basis of state policy” • Surge of development in light industry producing consumer goods for export  export-led industrialization path (1987)
    • Second wave of neoliberal reforms • The Tiananmen Incident • Deng’s violent crackdown indicated neoliberalization in the economy was not to be accompanied by progress in the fields of human, civil, or democratic rights • Another wave: • Monetary policy became a prime means of control • More opening to the outside, e.g. Shanghai Pudong • Democracy of consumption to forestall social unrest
    • The 1990s (So and Chu’s State Neoliberalism) • Strengthening of Managerial capacity • Cadre responsibility system • Strengthening of Fiscal capacity • Tax Sharing Scheme • The provinces that rely on the central government for revenue • Debt-financed investments in huge mega-projects
    • “Liberating” the SOEs • In early 1980s most of China’s phenomenal growth rate was being powered from outside the SOE sector • In 1983s SOEs were allowed to hire ‘contract workers’ with no social protections and limited tenure • Granted managerial autonomy • Managers could retain a certain proportion of their profits and sell any surplus they produced over their targets at free market prices
    • Saving the SOEs • Short-lived dual pricing system turned out • Still, SOEs did not flourish • Fell into debt and had to be supported • by the central government or • by the state-owned banks (lending to SOEs on favorable terms and credits) • Causing later serious non-performing loans to grew exponentially in volumes
    • Corporatizing the SOEs • In 1993, the state “turned targeted large and medium SOEs into limited liability or shareholding companies”; some could even offer public issues of shares • In 1994, all but the most important of the SOEs were converted into ‘share-based co-operatives’ • all employees had the nominal right to purchase shares • By 2002, SOEs accounted for only 14% of total manufacturing employment relative to the 40 % share they had held in 1990
    • Foreign Direct Investment • 1980s – the 5 Special Economic Zones (经济特区) • Xiamen 厦门 • Shantou 汕头 • Shenzhen 深圳 • Zhuhai 珠海 • Hainandao 海南岛 • Tax holidays, early remittances of profits and better infrastructure facilities • Produced goods for export to earn foreign exchange and to observe foreign technologies and managerial skills • > 2/3 FDI came from overseas Chinese (esp. HK and TW)
    • Bankruptcies of TVEs and SOEs • More and more ‘open coastal cities’ and ‘open economic regions’ for FDI • After 1995 opened the whole country up to FDI of any type • Competitive pricing mechanisms took over from the devolution of power from the central state to the localities as the core process impelling the restructuring of the economy • Bankruptcies of TVEs and SOEs  Unemployment surged  Labor unrests
    • Huge mega-projects • Debt-financed investments to transform physical infrastructures to absorb capital and labor surpluses and solve labor unrest • Three Gorges Dam • New subway systems and highways • High Speed Railway (HSR) • The Olympic Games • Deficit-financed  high risks of fiscal crisis • Rapid urbanization
    • Rapid Urbanization • Provides a way to absorb the massive labor reserves from rural areas • Provinces and cities engaged in inter-urban competition • They resist BJ’s effort to rein in their investments  have the power to fund their own projects by selling rights to develop real estate
    • Real-estate development and property speculation • Banks and other financial institutions imprudently funded massive property developments throughout China • In 1996 Shanghai bubble burst but resumed even more vigorously in the late 1990s
    • State-owned Banking System • Largely state-owned banking system expanded rapidly after 1985 • Employees raised from 973,355 to 1,893,957 • Branches raised from 60,785 to 143,796 0 200000 400000 600000 800000 1000000 1200000 1400000 1600000 1800000 2000000 1985 1993
    • State-owned Banking System • Lots of money went to failing SOEs • Creating asset bubbles • Non-performing loans • In 2003, a complex transfer of $45 billion from its foreign exchange reserves to 2 big gov’t banks, 0 500 1000 1500 2000 2500 3000 1985 1993 Deposits Loans
    • Modernization of education of science • Investment in a definitive strategy of research and development for both military and civilian purposes • Commercial satellite provider • Foreign corporations transfer a significant amount of their research and development activity into China, e.g. Microsoft, Oracle, Motorola, Siemens, IBM and Intel • Cheap but skillful labors in China • Huawei: selling at 1/3 lower than its rivals
    • External Relations • Foreign Trade: From 7% in 1978 to 40% in 1990 • In 1994, abolished dual currency exchange rate devaluated the official rate of 50% inducing massive growth in trade and capital inflows • By 2002, >40% GDP by FDI • Export-led development strategy • Not intended in 1978 • Fully forced after Deng’s southern tour in 1992
    • Connection with HK • HK’s chaotic entrepreneurial capital attracted by the cheap labor in Guangdong area in the late 1970s • Interested in TVEs in rural areas (allowed to build JV with foreign capitals) • provided machinery, inputs and the global marketing • Emulated by other foreign capitalists, e.g. TW, JP, S. Korea and the U.S. • offshore production center
    • Internal Market • Mid 1990s, attracted foreign capital • 10% of a billion population constituted a huge internal market • Heavy reliance of FDI makes China a special case different from JP or S. Korea • Inter-regional trade is weak
    • More Export • Joining WTO and shifting structures of international competition • inevitable realignment of trading relations • In 1980s, low-value-added production • In 1990s, low cost but highly skilled labor attracted value-added ladder of production to compete with S. Korea, JP, TW , Malaysia and SGP, e.g. electronics and machine tools • Causing negative competitive effects on other countries
    • More Import • Raw materials and energy • In 2003, of the world’s production, China took • 30% Coal • 36% Steel • 55% Cement • Importing from everywhere, including • Suadi Arabia, Sudan, Iran, Russia, Australia, Brazil, Argentina and even the U.S.
    • Dominating East and SE Asia • A regional hegemon with enormous global influence • Looking like the imperial empires in the nineteenth century but in economics term • Slower growth can roil commodity and financial markets everywhere (e.g. 2004)
    • External outlets for internal surpluses • Fund the US debt • Invest overseas to secure position in foreign markets • E.g. TV assembled in Hungary to assure Europe markets and N. Carolina to assure the US’s
    • Comparison (So and Chu’s State Neoliberalism) • 1980s – Expand private sector • 1990s – Reducing public sector • Privatization and corporatization • Commodification of human services • Deepening of liberalization
    • The dark side can be…
    • Environmental degradation • Rural and communal lands were dispossessed and sold to real-estate development
    • Banking system • 50% of its loan portfolio is non-performing • Only way out is by piling up balance of payments surpluses against the US. • But conversely, Chinese economic dynamism is held hostage to US fiscal and monetary policy • Excessive labor cannot be absorbed there comes a politics of overt repression
    • Departing from the neoliberal template? • Massive labor surpluses creating social and political instability • Either absorb or violently repress • The latter, authoritarian • High fixed capital and excessive production capital and boom and bust cycle of urban investments • All of the above require China to act like a Keynesian state • Maintain capital & Exchange rate controls
    • Dilemmas • Chinese business diaspora reabsorbed into the Chinese polity in 1997 already structured along capitalistic lines • The neoliberal rules of international trade set up through the WTO, which China joined in 2001 • Political demands for liberalization began to emerge • Worker protests surfaced in 1986 • Student movement against corruptions and requesting for greater freedoms climaxed 1989
    • Reconstructing class power? • Fastest-growing economies at the same time one of the most unequal societies • Social inequality was never eradicated during the revolutionary era • Regional inequalities have also deepened • Southern coastal cities vs. northern region • Uncertain indicator of the constitution of class power • Wholesale process of proletarianisation
    • Accumulation of wealth • The privatized SOEs Managers • Indigenous (土著) capital coming from TVEs • Real-estate development encouraged by dispossession • Speculation in asset values using credit granted on favorable terms • Surging consumer culture emerged in the main urban centers and postmodern culture including westernization
    • Social Resistances in 1990s (So and Chu’s State Neoliberalism) • Cadre-capitalist class formation • Fusion of political, economic and social capitals embedded in the local society • Trickily transforming communal capital into private capital • Working class formation • Workers in the state sector begin to feel like proletarians in a capitalist • Peasants discontent • The middle class intellectuals  the New Left
    • Social Unrests • Super-exploitation of labor • Capital accumulated by private and foreign firms comes from unpaid labor • Land seizures in rural area • All manners of protests, ‘many of them violent, have broken out with increasing frequency across the country in recent months’ • The party is clearly fearful of the potential breakdown in order and is mobilizing party and police powers to forestall the proliferation of any general social movement that may arise • China was the 2nd largest spender of military expenses on the World in 2009
    • The moral claims of the Maoists • Masses constituted by ‘workers, the peasantry, the intelligentsia and the national bourgeoisie whose interests were harmonious with each other and also with the state’ Vs. • Massive proletarianisation of workforce, the breaking of the ‘iron rice bowl’, the evisceration of social protections, the imposition of user fees, the creation of a flexible labor market regime, and the privatization of assets formerly held in common
    • Harvey’s conclusion… • China moved towards neoliberalization and the reconstitution of class power, albeit ‘with distinctly Chinese characteristics’ • At the same time, moving towards a confluence with the neoconservative tide in the U.S. • The authoritarianism • The appeal to nationalism • The revival of certain strains of imperialism
    • Turning point: the Retirement of Jiang (2002) • The Three Representatives • 三個代表思想要求中国共产党要: • 始终代表中国先进社会生产力的发展要求; • 始终代表中国先进文化的前进方向; • 始终代表中国最广大人民的根本利益。 • Hu & Wen’s policy • “Return to the good old days of the 1950s when the Maoist Party was in full control”
    • So and Chu’s Positive projection vs. Harvey’s negative conclusion • The Cadre-capitalist class has failed to capture the central party-state. Thus, the central party- state can still uphold the moral high ground of state socialism • Punishing Capitalist for tax evasion • Safety net for peasants by cutting rural taxes • State intervention of certain areas of capitals • Develops plans for strategic development and decrees prices and regulates the movement of capital • Shares risks and underwrites research and development
    • So and Chu’s Positive projection vs. Harvey’s negative conclusion (con’t) • Actively mobilized the ideology of nationalism • Defines itself as carrying out a national project to make China strong and powerful • A national cohesiveness based on cultural heritage and tradition rather than hostility toward the outside world • No excessive nationalism – control anti-Japanese sentiment, restrain anti-Americanism in the aftermath of the NATO bombing of the Chinese embassy in Yugoslavia • Adopts authoritarian policies to discipline labor, suppress labor protests, and to deactivate civil society • maintain a favorable environment to attract foreign investment • facilitate capital accumulation • seems unavoidable in export-led industrialization • The way out – State Neoliberalism
    • Emergence of State Neoliberalism (So and Chu’s State Neoliberalism) • The late 1990s, began to feel the pains of a neoliberal economy • Super-exploitation of labor power • The World’s most unequal societies • Environmental degradation • Leading to discontent and social conflict in society • Increasing call to regulate the market • Growing numbers of labor protests, peasant demonstrations, social movements, and other large- scale social disturbances
    • TransitionfromNeoliberalismtoStateNeoliberalismin the21st Century (SoandChu’sStateNeoliberalism) • Building a new socialist countryside and a harmonious society signaling a change of ideological orientation if the Chinese state • State would play a more active role in moderating the negative impacts of marketization • Abolishment of agricultural tax • Increase of rural expenditure by 15% to guarantee minimal living allowances for farmers • 87% hike for the health-care budget • De-commodification of human services • Promoting the spread of Mimumum Living Standard Assistance for the rural population
    • Future Trajectory • 4 possibilities • Return to socialism • Moved away from socialism >30 years • Working class and the peasants are still disorganized • Return to neoliberalism • When matured and consolidated its power, will push forward the neoliberal project • Move to imperialism • Great powers will try every means to prevent other states from challenging its position • The consolidation of state neoliberalism
    • Consolidation of State Neoliberalism • The party-state is promoting domestic consumption and to improve collective consumption and social insurance • Facing sharp economic downturn and the prospect of growing social unrest, the part-state has abundant reasons to move away from neoliberalism to state neoliberalism • If going on like this, “China appears to be emerging as the only poor country that has any chance in the foreseeable future of subverting the Western-dominated global hierarchy of wealth”.
    • Let’s go back to the Harvey’s
    • Neoliberalism on Trial • Stimulating global capital accumulation? Nope! • Reduction and control of inflation is the only systematic success neoliberalization can claim • Only success quoted: Sweden, a Circumscribed neoliberalization • Why are so many persuaded and fallen into the trap?
    • Persuading the many • The volatility of uneven geographical development has accelerated, permitting certain territories to advance spectacularly at the expense of others • Neoliberalization - a huge success from the standpoint of the upper classes, either restored class power to ruling elites or created conditions for capitalist class formation • Spectacular shifts of emphasis under neoliberalizastion giving it the appearance of incredible dynamism • the rise of finance and of financial services
    • Main substantive “achievement” • To redistribute, rather than regenerate, wealth and income • Through accumulation by dispossession • Including • commodification and privatization of land and forceful expulsion of peasant populations • Conversion of various forms of property rights • Suppression of rights to the commons • Commodification of labor power and the suppression of alternative forms of production and consumption • Colonial, neocolonial, and imperial processes of appropriation of assets • Monetization of exchange and taxation • Salve Trade • Usury, the national debt and the use of the credit system as a radical means of accumulation by dispossession
    • Achieving accumulation of dispossession • Privatization and commodification • Financialization • Management and manipulation of crises • State redistributions • Cutting expenditure on social welfare • But increasing spending on surveillance and policing
    • Neoliberal’s evils • Commodification of Everything • Cutting powers of trade unions and other working-class institutions • Transformation in the spatial and temporal co-ordinates of the labor market • Degrading value of the labor • Environmental Degradations • Destruction of tropical rain forests due to unrestrained application of neoliberal principles
    • On Rights • Theoretically upholding liberalization and freedoms of individuals • Actual practices of neoliberalism underpins the restoration or creation of class power and the results in terms of impoverishment and environmental degradation
    • Universalism of rights • Rights  only focus on political economic rights • Became an imperialists’ tool for westernization • To accept neoliberal regime of rights is to accept that we have no alternative except to live under a regime of endless capital accumulation and economic growth no matter what the social, ecological, or political consequences
    • UN Charter • Derivative rights • Freedoms of speech and expression • Of education and economic security • Rights to organize unions • Enforcing these rights would have posed a serious challenge to neoliberalism • Entailing a revolution of great significance in political-economic practices
    • Freedom’s Prospect • Roosevelt – excessive market freedoms lay at the root of the economic and social problems of the 1930s Depression • Vs. • Bush – neoliberal freedoms at the center of his political rhetoric
    • The End of Neoliberalism • Heavy debts in the capitalist countries, both developed and developing • 2 worst-case scenarios from the standpoint of the U.S. • A short burst of hyper-inflation would provide one way to delete the outstanding international and consumer debt • A long-drawn-out period of deflation of the sort that Japan has been experiencing since 1989.
    • Consolidation of neoconservative authoritarianism • Maintaining global hegemony through control over oil resources • Fear and insecurity both internally and externally were easily manipulated for political purposes • God-given character manifesting destiny of the US to be the greatest power on earth and as a beacon of freedom, liberty , and progress • Actually the US hegemony is crumbling • The New Imperialism
    • Alternatives • Engaging with the plethora of oppositional movements • Seek to distil from and through their activism the essence of a broad-based oppositional programme • Resort to theoretical and practical enquiries into our existing condition • Seek to derive alternatives through critical analysis • Most importantly, initiate dialogue between those taking each path and thereby to deepen collective understandings and define more adequate lines of action
    • Oppositional movements • Different from traditional labor movements • Not in the form of organized political parties • Direct relevance to particular issues and constituencies • Choi Yuen Village • The Korean Farmers
    • Critical Analysis • Urging people to respond in class terms: If it looks like class struggle and acts like class war then we have to name it unshamedly for what it is • Shows how and why popular movements are currently bifurcated • Defining movement types • Expanded reproduction concerning the exploitation of wage labor and conditions defining the social wage • Against accumulation by dispossession • Points up exploitable contradictions within the neoliberal and neoconservative agendas • Monopolization, centralization and internationalization of corporate and financial power • Startling increase in class and regional inequalities
    • Critical Analysis (Con’t) • Discourses to request for broader Rights • To Life chances, Political association and Good Governance • For control over production by the direct producers • To the inviolability and integrity of the human body • To engate in critique without fear of retaliation • To a decent and healthy living environment • To collective control of common property resources • To the production of space • To difference
    • Critical Analysis (con’t) • Argue against the neoconservative assertion of a moral high ground for its authority and legitimacy • Criticizing the anti-democratic nature of neoliberalism backed by the authoritarianism of the neoconservatives that should surely be the main focus of political struggle
    • To Conclude… • There is a far, far nobler prospect of freedom to be won than that which neoliberalism preaches • There is a far, far worthier system of governance to be constructed than that which neoconservative allows
    • Movie recommendation • Inside Job • http://www.youtube.com/watch?v=XsAFyTZfd4o
    • Thank you!