Tuesday, July 21, 2009

Paper, Scissors, Tiger, Dragon.

1. Dragon

Faced with the dramatic decline in direct foreign investment [26% Jan-Feb 09 vs Jan-Feb 08], declining exports [-21% Jan-Feb 09 vs Jan-Feb 08], declining profits [as much as -50% in shipping and containerization], China announced a stimulus program of some 4000 billion yuan aimed at creating a domestic market capable of absorbing and reproducing surplus accumulation at a profitability sufficient to ... well, to absorb and reproduce surplus accumulation beyond the existing limits of the world and domestic markets.

2. Scissors

Capitalism achieves what it achieves in all its glorious misery and vice-versa, by separating the means of labor from the conditions of labor-- by reproducing the classes that give its dead weight life. While capital, to exist as capital, requires access to wage-labor, wage-labor itself can only exist throught its dispossession, its detachment from the means of production so that the labor appears as useless save for its value in exchange for wages, in its exchange with capital.

It is dispossession that creates the domestic market-- the dispossession, the expulsion, of wage-labor in the production process and the dispossession of the subsistence agricultural producer. All of capital's "productivity" amounts to dispossession and expulsion.

Now what capitalism is compelled to do by its internal, abstract organization, and what it actually does do in the concrete conditions in which it finds itself enmeshed are more than two different things . They are two different things that are one and the same. Whatever conflict capital finds with the already or pre existing property relations, becomes the conflict within itself, with its organization of production as private property.

Whatever the limits, constraints capital encounters in its need to cut the ties that bind labor from land, to access detached labor; whatever the obstacles capital finds to its need to distinguish the laborer from the instruments of production through the wage form, obstacles that exist in the plantation, the hacienda, the manor, the great house, capital recognizes itself in those limits and obstacles. Value, the "as if" quality of the commodity-- as if value exists as a quantity, a thing, and not a relation, as if it possesses a life of its own and does not expropriate the lives of others, as if behind every "free market" there wasn't a death squad-- finds an image of itself, projects an image of itself unto every product obtained through every form of exploitation and brought to market. It, capital, bestows the as if quality through exchange onto all those products, treating them as if they were commodities, as if they were produced by wage-labor.

And the as if quality of value is conveyed also to the products of small-scale individual production, "subsistence +" production.

While the hacienda, the plantation, the manor, the great house and subsistence production cannot and do not create capitalism, capitalism can and does recreate the hacienda, the plantation, the manor, the great house. Capitalism can and does absorb all these forms in the limits to its own expansion, namely private property and profit. At the same time, capital is compelled by its own organization to interrupt that transformation, as it interrupts itself and its accumulation. Capital is compelled to undermine all of these forms of property as it undermines itself.

History is not a "on the one hand, while on the other hand" process. History is co-incident processes. If Marx and Engels played the card of capital's revolutionizing the method and relations of accumulation-- the card that had capitalism bequeathing to the workers the whole world, albeit in market form; the card that had capitalism abolishing all other modes of accumulation; the card that melted all that was solid into the quicksilver streams of credit, finance, circulation; the card where the land itself had been capitalized with all living labor minimized, and all the minimized labor transient-- history itself had another card up another sleeve. And that was the card of capital bequeathing to all of humanity its inability to effect the transformations of land and labor. History held the two-faced joker. One face-- the hacienda, the plantation, the great house. The other face-- small scale subsistence production. Both faces-- labor tethered to the land; capital unable to realize itself quickly enough, massively enough with more than enough wage-labor.

So for more than a century, in more than one country, the struggle for the emancipation of labor has been burdened, buried even, by this inability. This failure gets identified at various times as "uneven and combined development," "the land question," "the role of the peasantry," and most often, "the unfinished tasks of the bourgeois revolution."

Well, first things first. The only task of the bourgeois revolution is to secure the opportunity for the bourgeoisie to turn a profit. There is no other task as important, as essential, as bourgeois, as that. Economic development, "free" soil farming, "free" labor, are at one and the same times extraneous and inherent, accidental and essential to the bourgeoisie's political power. These are items to be negotiated, compromised, bargained down, in the name of order and property if the price is right.

The struggle for the emancipation of labor from wage-labor, however demands, requires the struggle to emancipate the land itself from private property, to transform it [and in some instances restore it] as the basis for social production; not as an instrument for exchange, but as the platform for satisfaction of need.

Consequently, the revolutionary impulse itself is profoundly anti-bourgeois as it confronts capital's recreation of the conditions of "unfree labor," of labor impoverished by scarcity, deprivation. Any "unfinished tasks" are the finished products of the world market. In reality a revolution can only become bourgeois in its defeat.

3. Tiger (uneven)(combined)

China's growth the past three decades has been based based, not on Deng's "four reforms," but on a triangle of cheap labor, foreign direct investments and exports. If clothes make the man, the metrics by which an economy is measured, tailored, fitted, dressed, and turned out , make that strategy look so g-o-o-d.

Contracted foreign direct investment since 1984 amounts to more than $1.2 trillion. Utilized FDI [the amount actually deployed] exceeds more than $700 billion. Sixty percent of the FDI has been dedicated to manufacturing. Twenty percent to real estate.

In 2000, half of FDI funds were invested in electronics and telecommunications manufacturing, with FIEs accounting for 72 percent of total output

In 2007 the FIEs account for 30 percent of gross output, 11 percent of jobs, 57 percent of trade.

The impact on international trade has been massive, with the companies created by the FDI, called foreign invested enterprises [FIEs] accounting for approximately 56 percent of China's exports and 56 percent of its imports, and 86 percent of high-tech exports in 2008.

While the leadership of the CCP has achieved success in recasting industry in the image of the great helmsman, Milton Friedman, the transformation of agriculture has not been quite so substantial. Certainly, gross agricultural output has increased. Total government expenditures on agriculture quadrupled in the ten years between 1997 and 2006. Rural consumption of electricity doubled between 2000 and 2006. Total power of agricultural machinery doubled between 1995 and 2006. Driven by the increased focus on dairy and meat farming, the area in production spiked 40 percent between 1995 and 1996, falling back some 8 percent between 1996 and 2006.

Grain and rice production remained fairly level between 1993-2006, with the farming of "cash crops," fruits, vegetables, meat, and dairy increasing substantially in the latter part of that period.

The gross output [measured by value] of agriculture, forest and fisheries increased 17 percent between 1998 and 2003, spiking 21 percent between 2003-2004, and increasing another 30 percent to 2007.

Impressive numbers to be sure, but not so impressive when analyzed on the basis of labor productivity.

Agricultural employment peaked in 1991 at 391 million, falliing back to 325 million in 2006, a number that exceeds the number employed in 1984, 1985, 1986, 1987.

In 2007, China had 301 million acres under cultivation. By contrast, the United States had 406 milllion acres in production. US agriculture employed 2 million compared to China's 300+ million. For that year gross agricultural receipts per worker in China measured approximately $2000 compared to $170,000 per worker in the US.

Total portion of the population living/working in rural areas in the US measures 3 percent compared to China's 40 percent.

Average area cultivated per agricultural worker in China amounts to 1 acre or less; in the US 194 acres.

The expansion of agricultural output in China has not altered the basic configuration of rural property and production from the forms that the Chinese Revoluton inherited and proved so incapable itself of altering.

Chairman Mao to the contrary notwithstanding, the history of China, in particular the history of agricultural production relations, does not give evidence of an emerging "incipient" capitalism throttled in its crib by imperialist penetration.

In his studies of agriculture in China, The Peasant Family and Rural Development in the Yangzi Delta 1350-1988 and The Peasant Economy and Social Change in North China, Philip C.C. Huang concludes that much of China's agricultural production is characterized by involution, through which productivity of land is maintained and even improved through the application of greater amounts of labor. The productivity of labor actually declines. Yields then increase with the increase of population only through increased labor on small, and shrinking plot size as plots are divided and sub-divided to accommodate the maturity of children in the farm families. Production itself remains tied to the needs of family subsistence, or "subsistence +" production. While landlords, emperors, taxes, and rents took advantage of the fragmented and atomized nature of rural production, involution was itself inherently resistant to any change in the patterns of land-tenure.

Historically, then, increased output has been achieved through increased labor intensity, increased land "productivity" through multi-cropping, inter-cropping, at the expense of labor productivity. One of the impacts of this agricultural involution on China's development was that the continuous overavailability of labor that preserved small-scale farming, that allowed output to increase with population increases, also supported a commercial network of home industry, market exchanges, rents, and sub-contracting both land and labor that inhibited capitalist penetration of the countryside. With home industry involving less fixed cost, with surplus labor available at rates far below rates in urban areas, with subsistence preserved through increased labor application, that sine qua non of capitalism, the detachment, dispossession of labor from the land, from the means of its own subsistence, its ability to create the conditions by which it could aggrandize labor as wage-labor and expel wage-labor from production was unattainable. Capitalism couldn't compete.

So....so it is not the fact that agricultural output hasn't increased in China since the advent of the "household responsibility system." It is the fact that such growth has not transformed agriculture from small-plot "subsistence + surplus" production, to one of capitalized production, where the land itself has value only in its production of exchange values. It is not the fact that growth has not occurred, it is the fact that such growth is limited by the physical, that is to say, the social organization of production, and that China is coming to the end of a cycle based on the existing organization of land and labor.

An indication of this obstacle to agricultural expansion is the change to the agricultural data of 2006 that was originally reported in China's 2007 Rural Statistical Yearbook and revised by the 2008 Statistical Abstract. In that revision, almost all the metrics-- gross output, sown area, output, animal inventories, slaughter, meat output, aquaculture products-- measuring the individual items in the 2006 agricultural sector-- crops, livestock, forestry, fisheries-- were revised substantially downward for that year 2006. Of course, this allowed the 2008 Statistical Abstract to report a number of increases in the same metrics between 2006 and 2007, some substantial, some modest, but that's the beauty of statistics.

4. Paper (tiger)

With the reduction in exports and imports beginning in 2008 (continuing through 2009), China announced its stimulus program of 4 trillion yuan, aimed at turning production inward, creating a modern infrastructure of road and rail linking city to city and city to countryside, and tapping the forced savings of the rural population to support the expansion of domestic production of durable and consumer goods through increased consumption. A domestic market is to be created to replace the shrinking market of international trade.

The backbone of the stimulus program has been the expansion of lending by regional and local banks.

Again, China has posted impressive numbers, reporting increases in industrial output, and raising its estimated GDP growth for 2009 to nearly eight percent from earlier estimates of six to 6.5 percent. Inflows of foreign currency and China's purchase of US Treasury instruments have increased.

But the domestic market? Capitalism does not reproduce nor expand though consumption. It expands through capitalization, through the exchange of values. Capitalism, in China as everywhere else, can only establish a powerful domestic market through the capitalization of agriculture, the dispossession of labor from the land, so that capital can exchange itself profitability with wage-labor, and through relative expulsion of wage-labor from production, which we call labor productivity. If such productivity does not exist in agriculture, the domestic market cannot be expanded. If capital cannot exchange itself profitability enough with dispossessed labor, then the expansion of capital does not occur.

China cannot establish its domestic market without massive dispossession of the rural population and concentration and consolidation of land under cultivation. To do so, however, unleashes the class warfare so dangerous to the capitalization of land itself, to private property. To do so when the profitability of industrial production is declining, when millions of migrant laborers have been forced back to their villages, threatens both private and state property.

In the first half of 2009, China's banks have lent 7.4 trillion yuan. This is twice the amount lent for the entire year 2008. Estimates are that total loans for 2009 will approach 10 trillion yuan. There is no way such rapid increases in lending can be achieved without the radical reduction in standards of "credit-worthiness," without declines in the quality and quantity of collateral supporting the loans. This should ring a bell everywhere around the world. And the bell rung is called a bubble.

In the second quarter 2009, foreign currency inflows exceeded export earnings and foreign direct investment flows. The difference is the so-called "hot money" that flows into the stock exchanges, into certain real estate transactions, into financial plays. The hot money exerts on China that same pressure for convertibility of the currency exerted by international trade and foreign direct investment, but in a more virulent, liquid, form. China's complaints and concerns about the stability of the US dollar, the suggestion of a special drawing right system to replace the dollar, its worries about the value of its US Treasury holdings, are direct reflections of the increasing pressure for direct convertibility. Such convertibility will expose China to currency fluctuations outside its control, and to attacks on the yuan based on declining profitability, demands from the FIE's for hard currency to repatriate profits, and capital flight.

In this cage, caught between internal class struggle and the demands of the world markets, it is China, despite its holdings of $2 trillion in foreign currency instruments, that finds itself to be the paper tiger.

S. Artesian, July 21, 2009

address all comments to: sartesian@earthlink.net

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