Susan George on Neo-liberalism: "'Who has a right to live and who does not.' Radical exclusion is now the order of the day..."

People wonder why the Democrats as a whole have been so perversely co-operative with the GOP in pursuing policies such as the ongoing, mass murder of Iraqis, the systematically dismantling of the welfare state, the open embrace and legalization of torture, massive warrantless surveillance, and the destruction of civil liberties. How, in the face of this, as many have wondered to themselves (and increasingly aloud), are Bush/Cheney still in office? Susan George's analysis below of neoliberalism is crucial in this regard because neoliberalism is the ideology that both the GOP and the Democrats subscribe to (albeit with certain tactical differences between them). Understanding that this is what in fact we face, and how dire this threat in fact is, is central to finding a way out of this.

"A Short History of Neo-liberalism: Twenty Years of Elite Economics and Emerging Opportunities for Structural Change"

by Susan George
Conference on Economic Sovereignty in a Globalising World
Bangkok, 24-26 March 1999

The Conference organisers have asked me for a brief history of neo-liberalism which they title "Twenty Years of Elite Economics." I'm sorry to tell you that in order to make any sense, I have to start even further back, some 50 years ago, just after the end of World War II.

In 1945 or 1950, if you had seriously proposed any of the ideas and policies in today's standard neo-liberal toolkit, you would have been laughed off the stage at or sent off to the insane asylum. At least in the Western countries, at that time, everyone was a Keynesian, a social democrat or a social-Christian democrat or some shade of Marxist. The idea that the market should be allowed to make major social and political decisions; the idea that the State should voluntarily reduce its role in the economy, or that corporations should be given total freedom, that trade unions should be curbed and citizens given much less rather than more social protection--such ideas were utterly foreign to the spirit of the time. Even if someone actually agreed with these ideas, he or she would have hesitated to take such a position in public and would have had a hard time finding an audience.

However incredible it may sound today, particularly to the younger members of the audience, the IMF and the World Bank were seen as progressive institutions. They were sometimes called Keynes's twins because they were the brain-children of Keynes and Harry Dexter White, one of Franklin Roosevelt's closest advisors. When these institutions were created at Bretton Woods in 1944, their mandate was to help prevent future conflicts by lending for reconstruction and development and by smoothing out temporary balance of payments problems. They had no control over individual government's economic decisions nor did their mandate include a licence to intervene in national policy.

In the Western nations, the Welfare State and the New Deal had got underway in the 1930s but their spread had been interrupted by the war. The first order of business in the post-war world was to put them back in place. The other major item on the agenda was to get world trade moving--this was accomplished through the Marshall Plan which established Europe once again as the major trading partner for the US, the most powerful economy in the world. And it was at this time that the strong winds of decolonisation also began to blow, whether freedom was obtained by grant as in India or through armed struggle as in Kenya, Vietnam and other nations.

On the whole, the world had signed on for an extremely progressive agenda. The great scholar Karl Polanyi published his masterwork, The Great Transformation in 1944, a fierce critique of 19th century industrial, market-based society. Over 50 years ago Polanyi made this amazingly prophetic and modern statement: "To allow the market mechanism to be sole director of the fate of human beings and their natural environment...would result in the demolition of society" [p.73]. However, Polanyi was convinced that such a demolition could no longer happen in the post-war world because, as he said [p.251], "Within the nations we are witnessing a development under which the economic system ceases to lay down the law to society and the primacy of society over that system is secured."

Alas, Polanyi's optimism was misplaced--the whole point of neo-liberalism is that the market mechanism should be allowed to direct the fate of human beings. The economy should dictate its rules to society, not the other way around. And just as Polanyi foresaw, this doctrine is leading us directly towards the "demolition of society."

So what happened? Why have we reached this point half a century after the end of the Second World War? Or, as the organisers ask, "Why are we having this conference right now?" The short answer is "Because of the series of recent financial crises, especially in Asia". But this begs the question--the question they are really asking is "How did neo-liberalism ever emerge from its ultra-minoritarian ghetto to become the dominant doctrine in the world today?" Why can the IMF and the Bank intervene at will and force countries to participate in the world economy on basically unfavourable terms. Why is the Welfare State under threat in all the countries where it was established? Why is the environment on the edge of collapse and why are there so many poor people in both the rich and the poor countries at a time when there has never existed such great wealth? Those are the questions that need to be answered from an historical perspective.

As I've argued in detail in the US quarterly journal Dissent, one explanation for this triumph of neo-liberalism and the economic, political, social and ecological disasters that go with it is that neo-liberals have bought and paid for their own vicious and regressive "Great Transformation". They have understood, as progressives have not, that ideas have consequences. Starting from a tiny embryo at the University of Chicago with the philosopher-economist Friedrich von Hayek and his students like Milton Friedman at its nucleus, the neo-liberals and their funders have created a huge international network of foundations, institutes, research centers, publications, scholars, writers and public relations hacks to develop, package and push their ideas and doctrine relentlessly.

They have built this highly efficient ideological cadre because they understand what the Italian Marxist thinker Antonio Gramsci was talking about when he developed the concept of cultural hegemony. If you can occupy peoples' heads, their hearts and their hands will follow. I do not have time to give you details here, but believe me, the ideological and promotional work of the right has been absolutely brilliant. They have spent hundreds of millions of dollars, but the result has been worth every penny to them because they have made neo-liberalism seem as if it were the natural and normal condition of humankind. No matter how many disasters of all kinds the neo-liberal system has visibly created, no matter what financial crises it may engender, no matter how many losers and outcasts it may create, it is still made to seem inevitable, like an act of God, the only possible economic and social order available to us.

Let me stress how important it is to understand that this vast neo-liberal experiment we are all being forced to live under has been created by people with a purpose. Once you grasp this, once you understand that neo-liberalism is not a force like gravity but a totally artificial construct, you can also understand that what some people have created, other people can change. But they cannot change it without recognising the importance of ideas. I'm all for grassroots projects, but I also warn that these will collapse if the overall ideological climate is hostile to their goals.

So, from a small, unpopular sect with virtually no influence, neo-liberalism has become the major world religion with its dogmatic doctrine, its priesthood, its law-giving institutions and perhaps most important of all, its hell for heathen and sinners who dare to contest the revealed truth. Oskar Lafontaine, the ex-German Finance Minister who the Financial Times called an "unreconstructed Keynesian" has just been consigned to that hell because he dared to propose higher taxes on corporations and tax cuts for ordinary and less well-off families.

Having set the ideological stage and the context, now let me fast-forward so that we are back in the twenty year time frame. That means 1979, the year Margaret Thatcher came to power and undertook the neo-liberal revolution in Britain. The Iron Lady was herself a disciple of Friedrich von Hayek, she was a social Darwinist and had no qualms about expressing her convictions. She was well known for justifying her programme with the single word TINA, short for There Is No Alternative. The central value of Thatcher's doctrine and of neo-liberalism itself is the notion of competition--competition between nations, regions, firms and of course between individuals. Competition is central because it separates the sheep from the goats, the men from the boys, the fit from the unfit. It is supposed to allocate all resources, whether physical, natural, human or financial with the greatest possible efficiency.

In sharp contrast, the great Chinese philosopher Lao Tzu ended his Tao-te Ching with these words: "Above all, do not compete." The only actors in the neo-liberal world who seem to have taken his advice are the largest actors of all, the Transnational Corporations. The principle of competition scarcely applies to them; they prefer to practise what we could call Alliance Capitalism. It is no accident that, depending on the year, two-thirds to three-quarters of all the money labeled "Foreign Direct Investment" is not devoted to new, job-creating investment but to Mergers and Acquisitions which almost invariably result in job losses.

Because competition is always a virtue, its results cannot be bad. For the neo-liberal, the market is so wise and so good that like God, the Invisible Hand can bring good out of apparent evil. Thus Thatcher once said in a speech, "It is our job to glory in inequality and see that talents and abilities are given vent and expression for the benefit of us all." In other words, don't worry about those who might be left behind in the competitive struggle. People are unequal by nature, but this is good because the contributions of the well-born, the best-educated, the toughest, will eventually benefit everyone. Nothing in particular is owed to the weak, the poorly educated, what happens to them is their own fault, never the fault of society. If the competitive system is "given vent" as Margaret says, society will be the better for it. Unfortunately, the history of the past twenty years teaches us that exactly the opposite is the case.

In pre-Thatcher Britain, about one person in ten was classed as living below the poverty line, not a brilliant result but honourable as nations go and a lot better than in the pre-War period. Now one person in four, and one child in three is officially poor. This is the meaning of survival of the fittest: people who cannot heat their houses in winter, who must put a coin in the meter before they can have electricity or water, who do not own a warm waterproof coat, etc. I am taking these examples from the 1996 report of the British Child Poverty Action Group. I will illustrate the result of the Thatcher-Major "tax reforms" with a single example: During the 1980s, 1 percent of taxpayers received 29 percent of all the tax reduction benefits, such that a single person earning half the average salary found his or her taxes had gone up by 7 percent, whereas a single person earning 10 times the average salary got a reduction of 21%.

Another implication of competition as the central value of neo-liberalism is that the public sector must be brutally downsized because it does not and cannot obey the basic law of competing for profits or for market share. Privatisation is one of the major economic transformations of the past twenty years. The trend began in Britain and has spread throughout the world.

Let me start by asking why capitalist countries, particularly in Europe, had public services to begin with, and why many still do. In reality, nearly all public services constitute what economists call "natural monopolies." A natural monopoly exists when the minimum size to guarantee maximum economic efficiency is equal to the actual size of the market. In other words, a company has to be a certain size to realise economies of scale and thus provide the best possible service at the lowest possible cost to the consumer. Public services also require very large investment outlays at the beginning--like railroad tracks or power grids--which does not encourage competition either. That's why public monopolies were the obvious optimum solution. But neo-liberals define anything public as ipso facto "inefficient."

So what happens when a natural monopoly is privatised? Quite normally and naturally, the new capitalist owners tend to impose monopoly prices on the public, while richly remunerating themselves. Classical economists call this outcome "structural market failure" because prices are higher than they ought to be and service to the consumer is not necessarily good. In order to prevent structural market failures, up to the mid-1980s, the capitalist countries of Europe almost universally entrusted the post office, telecomms, electricity, gas, railways, metros, air transport and usually other services like water, rubbish collection, etc. to state-owned monopolies. The USA is the big exception, perhaps because it is too huge geographically to favour natural monopolies.

In any event, Margaret Thatcher set out to change all that. As an added bonus, she could also use privatisation to break the power of the trade unions. By destroying the public sector where unions were strongest, she was able to weaken them drastically. Thus between 1979 and 1994, the number of jobs in the public sector in Britain was reduced from over 7 million to 5 million, a drop of 29 percent. Virtually all the jobs eliminated were unionised jobs. Since private sector employment was stagnant during those fifteen years, the overall reduction in the number of British jobs came to 1.7 million, a drop of 7% compared to 1979. To neo-liberals, fewer workers is always better than more because workers impinge on shareholder value.

As for other effects of privatisation, they were predictable and predicted. The managers of the newly privatised enterprises, often exactly the same people as before, doubled or tripled their own salaries. The government used taxpayer money to wipe out debts and recapitalise firms before putting them on the market--for example, the water authority got 5 billion pounds of debt relief plus 1.6 billion pounds called the "green dowry" to make the bride more attractive to prospective buyers. A lot of Public Relations fuss was made about how small stockholders would have a stake in these companies--and in fact 9 million Brits did buy shares--but half of them invested less than a thousand pounds and most of them sold their shares rather quickly, as soon as they could cash in on the instant profits.

From the results, one can easily see that the whole point of privatisation is neither economic efficiency or improved services to the consumer but simply to transfer wealth from the public purse--which could redistribute it to even out social inequalities--to private hands. In Britain and elsewhere, the overwhelming majority of privatised company shares are now in the hands of financial institutions and very large investors. The employees of British Telecom bought only 1 percent of the shares, those of British Aerospace 1.3 percent, etc. Prior to Ms Thatcher's onslaught, a lot of the public sector in Britain was profitable. Consequently, in 1984, public companies contributed over 7 billion pounds to the treasury. All that money is now going to private shareholders. Service in the privatised industries is now often disastrous--the Financial Times reported an invasion of rats in the Yorkshire Water system and anyone who has survived taking Thames trains in Britain deserves a medal.

Exactly the same mechanisms have been at work throughout the world. In Britain, the Adam Smith Institute was the intellectual partner for creating the privatisation ideology. USAID and the World Bank have also used Adam Smith experts and have pushed the privatisation doctrine in the South. By 1991 the Bank had already made 114 loans to speed the process, and every year its Global Development Finance report lists hundreds of privatisations carried out in the Bank's borrowing countries.

I submit that we should stop talking about privatisation and use words that tell the truth: we are talking about alienation and surrender of the product of decades of work by thousands of people to a tiny minority of large investors. This is one of the greatest hold-ups of ours or any generation.

Another structural feature of neo-liberalism consists in remunerating capital to the detriment of labour and thus moving wealth from the bottom of society to the top. If you are, roughly, in the top 20 percent of the income scale, you are likely to gain something from neo-liberalism and the higher you are up the ladder, the more you gain. Conversely, the bottom 80 percent all lose and the lower they are to begin with, the more they lose proportionally.

Lest you thought I had forgotten Ronald Reagan, let me illustrate this point with the observations of Kevin Phillips, a Republican analyst and former aid to President Nixon, who published a book in 1990 called The Politics of Rich and Poor. He charted the way Reagan's neo-liberal doctrine and policies had changed American income distribution between 1977 and 1988. These policies were largely elaborated by the conservative Heritage Foundation, the principle think-tank of the Reagan administration and still an important force in American politics. Over the decade of the 1980s, the top 10 percent of American families increased their average family income by 16 percent, the top 5 percent increased theirs by 23 percent, but the extremely lucky top 1 percent of American families could thank Reagan for a 50 percent increase. Their revenues went from an affluent $270.000 to a heady $405.000. As for poorer Americans, the bottom 80 percent all lost something; true to the rule, the lower they were on the scale, the more they lost. The bottom 10 percent of Americans reached the nadir: according to Phillip's figures, they lost 15% of their already meagre incomes: from an already rock-bottom average of $4.113 annually, they dropped to an inhuman $3.504. In 1977, the top 1 percent of American families had average incomes 65 times as great as those of the bottom 10 percent. A decade later, the top 1 percent was 115 times as well off as the bottom decile.

America is one of the most unequal societies on earth, but virtually all countries have seen inequalities increase over the past twenty years because of neo-liberal policies. UNCTAD published some damning evidence to this effect in its 1997 Trade and Development Report based on some 2600 separate studies of income inequalities, impoverishment and the hollowing out of the middle classes. The UNCTAD team documents these trends in dozens of widely differing societies, including China, Russia and the other former Socialist countries.

There is nothing mysterious about this trend towards greater inequality. Policies are specifically designed to give the already rich more disposable income, particularly through tax cuts and by pushing down wages. The theory and ideological justification for such measures is that higher incomes for the rich and higher profits will lead to more investment, better allocation of resources and therefore more jobs and welfare for everyone. In reality, as was perfectly predictable, moving money up the economic ladder has led to stock market bubbles, untold paper wealth for the few, and the kind of financial crises we shall be hearing a lot about in the course of this conference. If income is redistributed towards the bottom 80 percent of society, it will be used for consumption and consequently benefit employment. If wealth is redistributed towards the top, where people already have most of the things they need, it will go not into the local or national economy but to international stockmarkets.

As you are all aware, the same policies have been carried out throughout the South and East under the guise of structural adjustment, which is merely another name for neo-liberalism. I've used Thatcher and Reagan to illustrate the policies at the national level. At the international level, neo-liberals have concentrated all their efforts on three fundamental points:

* free trade in goods and services
* free circulation of capital
* freedom of investment

Over the past twenty years, the IMF has been strengthened enormously. Thanks to the debt crisis and the mechanism of conditionality, it has moved from balance of payments support to being quasi-universal dictator of so-called "sound" economic policies, meaning of course neo-liberal ones. The World Trade Organisation was finally put in place in January 1995 after long and laborious negotiations, often rammed through parliaments which had little idea what they were ratifying. Thankfully, the most recent effort to make binding and universal neo-liberal rules, the Multilateral Agreement on Investment, has failed, at least temporarily. It would have given all rights to corporations, all obligations to governments and no rights at all to citizens.

The common denominator of these institutions is their lack of transparency and democratic accountability. This is the essence of neo-liberalism. It claims that the economy should dictate its rules to society, not the other way around. Democracy is an encumbrance, neo-liberalism is designed for winners, not for voters who, necessarily encompass the categories of both winners and losers.

I'd like to conclude by asking you to take very seriously indeed the neo-liberal definition of the loser, to whom nothing in particular is owed. Anyone can be ejected from the system at any time--because of illness, age, pregnancy, perceived failure, or simply because economic circumstances and the relentless transfer of wealth from top to bottom demand it. Shareholder value is all. Recently the International Herald Tribune reported that foreign investors are "snapping up" Thai and Korean companies and Banks. Not surprisingly, these purchases are expected to result in "heavy layoffs".

In other words, the results of years of work by thousands of Thais and Koreans is being transferred into foreign corporate hands. Many of those who laboured to create that wealth have already been, or soon will be left on the pavement. Under the principles of competition and maximising shareholder value, such behaviour is seen not as criminally unjust but as normal and indeed virtuous.

I submit that neo-liberalism has changed the fundamental nature of politics. Politics used to be primarily about who ruled whom and who got what share of the pie. Aspects of both these central questions remain, of course, but the great new central question of politics is, in my view, "Who has a right to live and who does not." Radical exclusion is now the order of the day, I mean this deadly seriously.

I've given you rather a lot of bad news because the history of the past 20 years is full of it. But I don't want to end on such a depressing and pessimistic note. A lot is already happening to counter these life-threatening trends and there is enormous scope for further action.

This conference is going to help define much of that action which I believe must include an ideological offensive. It's time we set the agenda instead of letting the Masters of the Universe set it at Davos. I hope funders may also understand that they should not be funding just projects but also ideas. We can't count on the neo-liberals to do it, so we need to design workable and equitable international taxation systems, including a Tobin Tax on all monetary and financial market transactions and taxes on Transnational Corporation sales on a pro-rata basis. I expect we will go into detail on such questions in the workshops here. The proceeds of an international tax system should go to closing the North-South gap and to redistribution to all the people who have been robbed over the past twenty years.

Let me repeat what I said earlier: neo-liberalism is not the natural human condition, it is not supernatural, it can be challenged and replaced because its own failures will require this. We have to be ready with replacement policies which restore power to communities and democratic States while working to institute democracy, the rule of law and fair distribution at the international level. Business and the market have their place, but this place cannot occupy the entire sphere of human existence.

Further good news is that there is plenty of money sloshing around out there and a tiny fraction, a ridiculous, infinitesimal proportion of it would be enough to provide a decent life to every person on earth, to supply universal health and education, to clean up the environment and prevent further destruction to the planet, to close the North-South gap--at least according to the UNDP which calls for a paltry $40 billion a year. That, frankly, is peanuts.

Finally, please remember that neo-liberalism may be insatiable but it is not invulnerable. A coalition of international activists only yesterday obliged them to abandon, at least temporarily, their project to liberalise all investment through the MAI. The surprise victory of its opponents infuriated the supporters of corporate rule and demonstrates that well organised network guerillas can win battles. Now we have to regroup our forces and keep at them so that they cannot transfer the MAI to the WTO.

Look at it this way. We have the numbers on our side, because there are far more losers than winners in the neo-liberal game. We have the ideas, whereas theirs are finally coming into question because of repeated crisis. What we lack, so far, is the organisation and the unity which in this age of advanced technology we can overcome. The threat is clearly transnational so the response must also be transnational. Solidarity no longer means aid, or not just aid, but finding the hidden synergies in each other's struggles so that our numerical force and the power of our ideas become overwhelming. I'm convinced this conference will contribute mightily to this goal and I thank you all for your kind attention.

Check Out the A28 Campaign

See my newest link on the righthand column. A28

Speaking Truth to Power or Stenographers for Power?

Joseph Palermo has just posted at Huffington Post an excellent piece on New York Times columnist Michael Gordon's doing the dirty work once again for the White House's war plans. Check it out!

See two entries below this for my fourth and final installment of my China series.

How Credulous Do They Think We Are?

So, after dispatching two carrier groups to the Gulf, our government is now laying further groundwork in the realm of public opinion for a military attack on Iran, claiming that Iran is secreting weapons into Iraq. Even assuming that the Iranians are assisting Shias in Iraq to fight a civil war, who started that civil conflict? Hmmm. Let's think real hard here: the same US White House that is now claiming that, oh my goodness, there are foreign elements in Iraq! Of course, US Marines and Blackwater forces and so on aren't foreign elements.

But the question of whether there are Iranian weapons in Iraq or not isn't the question. The issue is that our government is readying people for a military confrontation. The very same people who created a disastrous humanitarian crisis in Iraq, the very same people whose continued presence there is perpetuating this crisis, are now saying that they need to widen the war in order to fix the problem they created in the first place! So, to those who continue to say that we ought to wait until '08: what do you think now about the urgency of ousting this regime in Washington? How else can we prevent a pending war on Iran without creating a completely different political atmosphere by bringing the people into the streets and into offices and onto campuses in protest?

China 1989 - Fourth Installment

This is the fourth and final installment in my series, "Exorcising the Ghost of Mass Political Activism: Deng Xiaoping, Workers, Peasants and the 1989 Spring Uprising." (Part I of this series is here.)

I wrote this paper in the early 1990s, and updated it in the mid-1990s. I post it here because the events of the late 1980s in China provide a wealth of lessons for those who want to radically remake society. In the process of converting this from its original format in WordPerfect to Word, I lost the footnotes. Fortunately I still have a copy of this essay in hard copy, but I haven't had the time to add the footnote references and discussion. Please forgive me for this temporary shortcoming.

One of the lessons from the 1989 Spring Uprising that we can learn today is that popular dissatisfaction and restiveness, if given a lightening rod, can grow to extraordinary dimensions. We need to pay very close attention to the possibilities inherent in a developing situation, even if on the surface of things such dramatic alterations in the political landscape don't appear to be present. Our rulers are planning another war in a desperate gamble to rescue their disaster in Iraq and Afghanistan. They have been in the process of fundamentally restructuring what it means to be an American and what America is - normalizing and legalizing torture, pre-emptive wars of aggression and mass murder. Civil liberties that people laid down their lives for are being systematically ripped away and torn to shreds. The sense of unease and distress over this is widespread. Those who see this most clearly now need to step forward and galvanize these broad sentiments and turn this into an open fight over what kind of world we and our children will live in. As more people learn more about what our government has actually been doing and what it is actually planning (e.g., especially, through reading Impeach the President) they will step forward and take history into their hands.

As the World Can't Wait people have been saying: "If not us, who? If not now, when?"


Part 4:


Class Polarization

The preceding discussion sketches in outline the problem for workers. Turning now to the countryside: the minority of peasants who have made quick fortunes in sideline operations (the "10,000-yuan households" and farmers in the suburbs of major cities) have evidently provoked widespread resentment (and numerous incidents of retaliation). Gong (1990), for example, notes:

“China's farmers were equally unenthusiastic about the direction of reform. Some farmers in suburb areas had gotten rich selling produce they raised... However, most farmers lacked easy access to the free markets... They said they would not turn their grain over to the state if it continued paying them with paper IOU's.” (p. 80. See also Chan (1989: 123)).

The collective responsibility system's overthrow, and its replacement with the traditional household as the responsible unit has led to a number of changes. Among these has been the downgrading of women's role (under Mao the declared holders of "half the sky")(see, for example, Davin (1990). This has occurred over a broad front: the abandonment of the canteens and child care facilities (thus reimposing the traditional burdens of cooking and childrearing on women), the fixing of responsibility for production in the hands of men in the household, the hoary reappearance of female infanticide (since women are married out and therefore in the traditional scheme not income sources and are not expected to provide for parents when the parents grow old) and a spur to larger families (since the household unit is now sole source of income and security it pays to have more children). This latter development obviously sabotages the government's campaign to limit population growth.

There have been a number of other consequences of these changes. Collectively built and maintained irrigation projects, for example, are commonly in disrepair since it profits no one individually to maintain them. Grain is in short supply and cultivated acreage has actually declined in the reform years. Further, with the official encouragement to "get rich quick" and the nouveau riche rural entrepreneurs as the government's official "models," disputes, sometimes violent, have erupted between neighboring communes and villages. For example:

“The pretext for a lucrative attack on state property could be remarkably slight. Wuchang Lake in Wangping, Anhui, opened for fishing on 19 January 1980. That day, Chang Xiaokai, secretary of the Party branch of the Dachang production brigade in Wuchang commune, got into a squabble with a policeman about a boy picking up a fish that had been dropped on the ground. One of Chang's nephews stood by him during the argument, while another of his nephews (also a member of the brigade Party branch) pulled an oar...in an attempt to strike the policeman. Seeing this dispute, fellow brigade members rushed to the police command post and beat up 16 leading cadres, public security cadres, and police who were trying to organize the fishing operations... Then Chang Xiaokai directed his followers to smash a truck of the Hefei aquatic products company and seven buildings being used by the command post. That afternoon, the local peasants looted 38,900 jin of fresh fish.”

Perry's short article is replete with incidents such as this. Stavis notes a number of rural incidents: In 1988, thousands of Shandong farmers destroyed and looted the party committee building after the local party had urged garlic growing, taxed it, and then were unable to purchase it all at a high price. In Hunan the same year villagers damaged a procurator's office and cadres' quarters angered by the way the government handled a fatal fight between two men after one assaulted a woman. Between one to three thousand farmers fifty miles southwest of Beijing battled several thousand police June 21 and 22, 1988 in an effort to prevent a petrochemical plant's pollutants being allowed to enter their irrigation system. Seven people were reported killed, seventy police injured, and five arrested. On June 4, 1988, peasants looted a coal-mine to compensate themselves for pollution caused by the mine.

"A mob attacked twenty-seven tax collectors with rocks, bottles, sticks, and acid when the tax collectors went to inspect jewelry manufacturing shops... These and other incidents were triggered by discontent over price hikes and wage levels."

Alongside this, according to official Chinese media, there has been an alarming rise in feudal superstitions activities, often led by party members! Since neither the party nor the collective will any longer provide anyone assurance of safety and welfare--it is all up to your own household or extended family now--the reappearance of feudal religious and superstitious practises as succor against an uncertain future and the capricious elements is hardly surprising. The People's Daily of 12 July 1982 cited "'frequent reports' that in some areas people are taking advantage of feudal superstitious beliefs to call themselves emperor, make women their 'imperial concubines,' and disrupt social order." As Perry points out, while the rural cadre are now charged with the task of protecting state interests in the countryside, their own bases of power have been undercut by the new agricultural reforms. The government and media have expressed alarm at these incidents and responded by blaming the incidents on the "calamitous years" of the Cultural Revolution and the policies of Lin Biao and the "Gang of Four." They cite ideological problems as the source of the problem:

"It is necessary to introduce scientific knowledge to the masses and vigorously conduct education in idealism and atheism. When their awareness is heightened...they will then spontaneously destroy superstition."

However, as Perry goes on to note:

"Missing from such interpretations, of course, is any acknowledgement that the policy content of reforms enunciated at the Third Plenum may be responsible for inciting popular resistance; that such opposition may in fact be an expression of certain social interests disadvantaged or otherwise brought into play by the new agricultural measures. (Emphasis in the original)"

Perry cites that for the current regime, "one of the most serious costs [of the GPCR years] is the fact that 'quite a few cadres are still under the influence of leftist ideology.' As a result, many local leaders feel less than enthusiastic about post-Cultural Revolution proposals. The lack of commitment, in turn, means a decline in the state's capacity to enforce its will in the countryside."

Government spending on agriculture went from 11% of total capital investment in the 1970's to 6% in the early 1980s to 3% in the late 1980's, a drop of almost 400%. "The increase in agricultural productivity in the 1980s had been derived form the benefits of fertilizer plants purchased in the 1970s [i.e., under the "Gang"] and as a consequence of greater incentives given individual peasant households. But now few new fertilizer factories were built, and no new irrigation and water projects were undertaken. Without better machinery and fertilizer, peasants would have to work late into the night to continue to improve productivity."

In addition, Deng's wide-open door to foreign capital has severely exacerbated class polarization in China. Especially in the coastal regions enclaves have been carved out in which Chinese workers enjoy little more than service class status alongside prosperous foreigners. The much-touted Special Economic Zones that Deng pronounced his equivalent of the Learn from Dazhai (Learn from Shenzhen) movement have not produced the hoped for economic miracles (interestingly, his model Shenzhen was the site of an anti-government march of 100,000 in 1989). The economic reforms have, however, caused a flood of foreign goods, especially Japanese, to invade China (the initial trigger of the protests was demands that the "second Japanese invasion" be stopped). Yet it is precisely this path of opening the doors even wider to foreign capital that Deng must increasingly rely on to attempt to bail himself out of trouble. The paradox is that the so-called cure of economic reforms caused the hemorrhaging of the patient. Further such cures may only worsen the disease.

The demand for control over one's political and economic life has been especially spurred on by the widespread sense that people have been broadly disempowered. Workers are no longer the vanguard but once again people whose only role is to work hard. Students and intellectuals are told that they now have freedom of thought, yet find that their attempts to use the "four freedoms" are completely shut down.

The Cultural Revolution's Legacy

Whereas workers in Russia and Eastern Europe have nearly universally greeted the rhetoric of the working class being the leading class with profound cynicism for the last several decades, in China this was not merely CCP rhetoric. If anything, the GPCR [Great Proletarian Cultural Revolution] is condemned by those who despise it most of all for its unleashing of people from below against people on top. This is, of course, especially true of those in power today. Falkenheim (1978), in his study of emigree Chinese concluded: "Both [young and old respondents] held that the psychological effects of years of open factional battle in China had been to produce a generation of young Chinese far bolder and more questioning (t'iao-p'i ta-tan) than themselves." (p. 32) Halpern (1989) notes the GPCR's impact on the 1989 democracy movement:

"The movement's origins lay not in participant's calculations about likely success or failure, but rather in a participatory political disposition produced by the experiences of the Cultural Revolution... In some people, primarily young and urban, cynicism and a temptation to refrain from political action were more than counterbalanced by a strong belief in the legitimacy of popular participation created by the rhetoric and experiences of the time.

"One author, himself a former Red Guard, has suggested that in December 1966, 'for the first time the broad ranks of workers were able to give their superiors a piece of their mind without fear of being beaten down as anti-party, anti-socialist elements.' Frustrations were aired as the 'rank and file took the cadres to task.' They reprimanded them over 'the unreasonable treatment they had been subject to over the years. Petitioners began to pour into Beijing... In some places, ... conservative party managers tried to restrain the leftists by rewarding workers with goods and money."

The comments of another former Red Guard echo this sentiment:

"At the beginning of the Cultural Revolution I feel the ordinary people were exhilarated by their new right to criticize and even to attack their bosses. The suppressed humiliation that one suffers at the hands of a faceless bureaucracy builds up a resentment that is like the surging tide blocked by a dam."

One Chinese woman, in a personal conversation with this author, described the Cultural Revolution this way: "The people were ecstatic." And as a respondent in Falkenheim's study points out: "After the Cultural Revolution, he said, 'you could feel free to criticize party members without feeling that you were attacking the party. This is a big change.' Few felt that the 'great order' now being sought by CCP Chairman Hua Kuo-feng would have the effect of reducing the openess initiated by the Cultural Revolution." (p. 31).

Interestingly, even though Falkenheim characterizes his respondents as politically "lukewarm" middle of the road types,

"[W]hen asked to comment on the impact of the fall of the Gang of Four, [they] challenged the idea that a new era of "liberalism" was dawning. Instead, they viewed recent events as contributing to a new era of conformism and orthodoxy."(p. 32)

Nathan (1985), Brodsgaard (1981), Falkenheim (1978), Feigon (1990), Zhu/Zhao/Li (1990) and Rosen (1985) reach similar conclusions regarding the Cultural Revolution's democratizing effects.

"Reassessing the legacy of the Cultural Revolution for themselves, they [the students] sympathized with the desire of those Revolutionary Red Guards who in the 1960s had hoped to eliminate bureaucracy and corruption and return the party to its earlier revolutionary heritage... They believed that much of the openness and decentralization that had occurred in China since 1977 had been made possible because the Cultural Revolution weakened the Party and forced the government once more to appeal to the masses to retain its power."

This image is of course completely at odds with the picture painted by the current government. It would be surprising, however, if the legacy of decades of mass political campaigns aimed precisely at mobilizing people politically and enjoining them to decide political questions themselves would not have left its mark on China's citizens. Formally abolishing the Four Freedoms has proven easier for Deng than erasing "the traces of mass movement activism...from the life-style of the nation's youth."

Deng's consigning of workers to the bottom of the heap against the background of several decades as the leading class triggered a more rapid, more conscious and more massive response than has been seen in other countries after similar moves to marketize the economy. Egalitarianism and its dramatic decline (including the growing hatred for the new managerial class) under Deng appears to be the way in which most workers are entering into political combat with the regime. That is, while for the majority of workers the "historic mission of the working class" to abolish all class distinctions and uproot all forms of inequality and privilege may not yet be in the forefront of their consciousness, the evident widening gaps between them and their superiors, the way workers have been consigned to being driven workers induced by coercion to produce more, and so on, is seen as a clear and present danger.

The State of the Party

One result of the past mass political campaigns (and the Cultural Revolution in particular) persists in the presence of a decentralized and fairly politicized mass base. This situates Deng on the horns of a dilemma. He must, on the one hand, protect the party and central leadership as his power base and the apparatus of rule. Without a strong central leadership China would be ungovernable. As it is, centrifugal forces have been unleashed throughout society that are causing, for example, atomization and bitter, destructive rivalries between rural regions and villages. On the other hand, Deng is bent on moving to a market driven economy. A centralized leadership without real decentralized initiative to go along with that centralized guidance stands in contradiction to and as a hindrance to implementing a market economy. As more and more functions (specifically economic ones) have been divorced from party members and placed in the hands of managers, and so on, the raison d'etre and mass base for party members is slipping away. As Stavis notes, for example:

"[T]he post of factory manager was separated from that of party secretary. The managers received new powers to punish or fire workers, and the party branches were left with the vague task of guaranteeing and supervising by methods of party self-development, mass work, and inspiration. These changes threatened the stability of China's industrial arrangements... As implementation of the reform began, a complex power struggle to establish new power relations emerged between the party, the People's Congress, and the government."

On one side you have highly placed cadre (and their scions) becoming extremely wealthy by engaging in high level corruption. On the other side you have some cadre who have been excluded from participating in those big-time spoils engaging instead in leading feudal superstition spectacles and participating in (often leading) bitter internecine fights over property with neighboring villages. A further complication in this is that different sectors of industry have fared differentially under the economic reforms. Principals in the heavy industries, for example, and associated cadre, have not seen the benefits that light industry has, and there are sharp conflicts within and between these sectors and sections of the party.

Vestiges of people brought into the party during the heady GPCR days persist in the lower party ranks especially and provide an ongoing problem for Deng implementing his policies. Finally, within the national leadership cracks and fissures have appeared as different sections and individuals battle over how best to contain the masses and carry forward with a market driven economy. The struggle between Deng and Zhao Ziyang, for example, was exemplary of this.

Conclusion

Red Flag's unabashed statement that "ideals are far-away, politics are meaningless, but cash is real" can perhaps now be read both as a crass celebration of capitalist logic and as ironically true. Cash is, after all, not a thing but a social relation, that is, a class relation between a privileged class and an oppressed class. The Spring Uprising represents, in its essential thrust, the reassertion of real class struggle against oppressive officials. Moreover, the situation in the countryside, where 60% of China lives, bodes ill for the current government.

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National Boycott to End the War and this Administration!

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Book Talk in NYC Friday, 2/16/07 at 7 p.m.

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Hope to see you there!