- ISBN13: 9781583671825
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- Notes: Brand New from Publisher. No Remainder Mark.
Product Description
In recent years, China has become a major actor in the global economy, making a remarkable switch from a planned and egalitarian socialism to a simultaneously wide-open and tightly controlled market economy. Against the establishment wisdom, Minqi Li argues in this provocative and startling book that far from strengthening capitalism, China’s full integration into the world capitalist system will, in fact and in the not too distant future, bring about its demise. The author tells us that historically the spread and growth of capitalist economies has required low wages, taxation, and environmental costs, as well as a hegemonic nation to prevent international competition from eroding these requirements. With the decline of the economic power of the United States, its current hegemonic role will deteriorate and the unprecedented growth of China will so erode the foundations of capital accumulation—by pushing wages and environmental costs up, for example—that the entire capitalist system will be shaken to its core. This is essential reading for those who still believe that there is no alternative.
The Rise of China and the Demise of the Capitalist World Economy
I had hoped this would be a hopeful book somehow laying out a convincing argument that China’s rise will eclipse the disintegrating international capitalist economy and usher in a new world order focused on meeting human needs in an environmentally sustainable manner. Sadly, that is not this book’s argument.
“Chinese socialism was the historical product of a great revolution, which was based on the broad mobilization and support of the workers and peasants comprising the great majority of the population. As a result, it would necessarily reflect the interests and aspirations of ordinary working people. On the other hand, China remained a part of the capitalist world-economy, and was under constant and instance pressure of military and economic competition against other big powers. To mobilize resources for capital accumulation, surplus product had to be extracted from the workers and peasants and concentrated in the hands of the state. This in turn created opportunities for the bureaucratic and technocratic elites to make use of their control over the surplus product to advance their individual power and interests rather than the collective interest of the working people. This was the basic historical contradiction that confronted Chinese socialism as well as other socialist states in the twentieth century.”
The author, Minqi Li, was a member of the student dissident movement of the 80s in China. He describes the milieu during which he studied neoclassical economics at Beijing University: “The 1980s was a decade of political and intellectual excitement in China. Despite some half-hearted official restrictions, large sections of the Chinese intelligentsia were politically active and were able to push for successive waves of the so-called ‘emancipation of ideas’ (jiefang sixiang). The intellectual critique of the already existing Chinese socialism at first took place largely within a Marxist discourse. Dissident intellectuals called for more democracy without questioning the legitimacy of the Chinese Revolution or the economic institutions of socialism.
After 1985, however, economic reform moved increasingly in the direction of the free market. Corruption increased and many among the bureaucratic elites became the earliest big capitalists. Meanwhile, among the intellectuals, there was a sharp turn to the right… The politically active intellectuals no longer borrowed discourse from Marxism. Instead, western classical liberalism and neoliberal economics, as represented by Friedrich Hayek and Milton Friedman, had become the new, fashionable ideology.”
A turn towards neoliberalism had, by the 1980s, been made possible by decades of Maoist development policy, which had developed “the necessary industrial and technological infrastructure [allowing China to] become a major player in the global capitalist economy.” Li does a good job explaining the capitalist world-system, according to Immanuel Wallerstein’s formulation, with its separation into core, semi-peripheral and peripheral states. The international division of labor has core states, like the U.S. and Japan, performing cutting-edge production requiring massive investment and organization, and which offer the greatest profit margins; the semi-peripheral states, like South Korea and most recently China, performing second-generation production that was cutting edge decades ago but which still offer substantial profits; and the peripheral states, like Angola and Bangladesh, which perform low value-added production like raw material exports and low-tech manufacturing.
Li argues that China’s move from peripheral to semi-peripheral status (as China now produces all sorts of high- and low-tech products for the core states) signals trouble for the capitalist world-system: “the current ‘rise of China’ as well as the ‘rise of India,’ could be the signal that the capitalist world-economy is calling upon its last strategic reserves (such as China, India, the remaining resources, and the remaining space for pollution) to make one more attempt to jump-start global accumulation… The current global development is likely to suggest that several secular trends, which result from the inherent laws of motion of the existing world-system, are now reaching their historical limits.”
Why? Because the capitalist world-system relies on strategic reserves of labor that can be called upon when existing labor forces begin to successfully fight for higher wages. Since the system needs high profit margins to reproduce itself via investment, and since high wages put pressure on profit margins, the capitalist world-system needs countries like China and India to turn to for their cheap labor forces once wage costs, or lack of effective demand (in other words, low wages that reduce a market’s buying power) begin to threaten profitability. But the very process of exploiting labor in China – building factories and creating an urban working class, moving China from peripheral to semi-peripheral status – threatens to undermine the ability to exploit such labor in the future. Li explains: “To the extent that the non-core states have lower levels of proletarianization, workers tend to be less educated, less effectively organized, and under constant pressure to compete against a large rural reserve army [of laborers]. The workers in these states, therefore, tend to have much lower bargaining power and receive significantly lower real wages. *The low real wages in the periphery and semi-periphery make it possible for the world surplus value to be concentrated in the core and help to keep down system-wide wage costs*. However, in the long run, the development of the capitalist world-economy has been associated with the progressive urbanization of the labor force. After some initial disorientation, urbanized workers have invariably struggled for higher degrees of organization and extension of their economic, social and political rights. Their struggles have led to growing degrees of proletarianization within the capitalist world economy.” (emphasis added)
This spells trouble for the world-system, since as production costs increase in China as workers successfully fight for higher wages, there will be few alternative states for producers to turn to for cheap, educated labor and efficient infrastructure. Also, China’s ever-increasing contribution to environmental degradation threatens to undermine the world economy through destruction of the natural environment of which it is a part.
Li’s analysis of economic – and, more depressingly, ecological trends – leads to the following conclusion: “With the decline of the US hegemony (reflected by its ever-declining ability and willingness to pursue the system’s long-term, common interest), no other state is in a position to replace the US and provide effective leadership for the system. China and every other potential hegemonic candidate all suffer from insurmountable contradictions and weaknesses. None has the ability to offer ‘system-level solutions’ to ‘system-level problems.’ Either the existing world-system has exhausted its historical space for potential new leadership and therefore is doomed to systemic disintegration, or the new leadership will have to assume the form of an alliance of multiple continent-sized states, which will then become a world-government and therefore bring the existing world-system to an end.
The capitalist world-economy rests upon the ceaseless expansion of material production and consumption, which is fundamentally incompatible with the requirements of ecological sustainability. Depletion of material resources and pollution of the earth’s ecological system have now risen to the point that the ecological system is on the verge of collapse and the future survival of humanity and human civilization is at stake.
To summarize, multiple economic, social, geopolitical, and ecological forces are now converging towards the final demise of the existing world-system, that is, the capitalist world economy.”
What comes next could be a rational world-system of production geared towards first fulfilling human needs, then wants, in an ecologically-sustainable manner. But while the current system’s demise is assured, there is no guarantee of the character of its replacement, and, at this point, very little likelihood it will resemble the description above.
Rating: 5 / 5
This book is less than 200 pages long but is so well written in clear prose expressed very conscisely. I learned an overview of China’s modern imperial history, the Chinese Civil War, Maoism, the coming of capitalism to China in the late 1970s, the Tiananmen Square protests, Immanuel Wallerstein’s world systems theory, the ecological and energy implications of Chinese (and other semi-peripheral nations) industrialization among much more. The book made me want to read and learn more (which I plan to do via the works listed in the bibliography).
Rating: 5 / 5
Professor Minqi Li clearly details how the deep embedded contradictions of late capitalist modernity have become so acute that chaos is inevitable. Placing the rise of China in the context of the Neoliberal World-System, Li explicates whether this chaos develops into the bifurcations necessary for a new world system based on social justice and economic democracy, or has international haute finance culminated to the point where economic liberalism is uncontrollable and what lies ahead is the violent outbursts of religious fervor comparable to that of Fascism decades ago. This book is a must read for scholars, activists, and concerned citizens of the the like who strongly maintain that another world is indeed possible.
–David Fields, Ph.d Student of Economics University of Utah.
Rating: 5 / 5
“The Rise of China and the Demise of the Capitalist World Economy” provides a major contribution to understand the deeper dynamics and structural implications associated with the progressive expansion of world capitalism. Contrary to the mainstream view that sees the rapid growth of China as proof of the unquestioned success of free markets and trade liberalization, Minqi Li offers a very different and powerful interpretation of the integration of China in the global capitalist system. Drawing upon Marxist theory and World-System theory, Minqi Li analyzes the rise of China in the context of the historical evolution of global capitalism, and in light of its social and ecological effects. In this framework, China’s integration in the world markets contributes to reveal the historical limits of world capitalism. Minqi Li combines a sharp critical analysis with a wide selection of data and statistical analysis, which is presented to be accessible also to people without a background in economics while at the same time making his arguments stronger and more effective. In particular, the chapter on climate change and natural resources provides a very comprehensive and detailed analysis of the critical challenges that the future of humanity faces. Minqi Li concludes that capitalism, defined as a system based on capital accumulation and pursuit of profit, does not only present social and economic imbalances but is also not compatible with ecological sustainability. However, his book does not project inevitable self-destruction for the world system. It is instead a book that inspires hope and faith in the capacity of humanity to create a better economic system, in which the development of individuals has the priority over endless capital accumulation and insatiable research for profit opportunities. Minqi Li’s book is essential reading not only for scholars and activists, but also for anyone who wants to better understand the world in which we are living and who wants to hope that a better world is possible.
Rating: 5 / 5
This short book sets out a hard hitting argument as to where the “world system” is heading in response to the rise of China (and India). The argument runs something like this. The world system as it has evolved since the sixteenth century has depended on a hegemon to set the rules and maintain a framework within which the capitalist system works. That hegemon was originally the Dutch Republic during the days when it was the world’s financial centre. It was replaced by Britain and then by the United States. With the United States in relative decline and China (but also powers such as India and Brazil) rising, that hegemony is drawing to an end. The author sees no real successor to the United States as hegemon because of structural weaknesses within each possible successor (even if China is the likeliest successor). These weaknesses are likely to prevent the successor from taking over the role the US has played. Further, under the challenges of diminishing resources and climate change, the author sees little prospect of any successor to the United States being able to command adequate resources to succeed the United States and support a hegemonic position. The United States itself is now too weak to continue that role especially in light of the strong challenge posed by China (and others).
The problem posed specifically within the framework of Marxist “world systems” theory is that capitalism always depends on looking for the cheapest labour and has moved from place to place in the search for the cheapest labour. The last major viable reserve of labour was China which global capitalism began to exploit from the 1980′s onwards. With labour costs increasing in China as a result of better organisation by Chinese workers (and in other “emerging” economies), global capitalism will have exhausted its last major reserves with nowhere else to go. Capitalism (especially in the US) therefore is heading towards a dead end.
The author sets out a succinct survey of Chinese history in the modern era which he then weaves into his main argument. He provides an overview of the Mao era with its successes in providing basic healthcare, education and infrastructure off the back of which the new capitalist China arose. Other works on contemporary China emphasise the reforms beginning in 1979 as the starting point without reference to the foundations laid previously. He views the abandonment of the Maoist project and its replacement with the State capitalist experiment that Deng Xiao Ping’s policies set in train with regret. He sees China’s entry into the capitalist game and its demand for resources and pressure on the “world system” as a major factor underlying the impending demise of the capitalist world system. There is simply not enough to go around to support a growing China (and India) at Western levels of consumption. There is also the lack of any further reserve of cheap labour.
The facts and analysis the author marshals to support his views as to the unsustainability of the capitalist world system and its ability to support the new players are terrifying. I am not aware of global climate change being brought into the historical narrative quite so forcefully before. The scenario of a denuded planet with a significant reduction in habitable areas is truly alarming leaving an ever diminishing resource portfolio with which to meet the challenges of the future, especially everyone’s expectations for higher standards of living.
The argument up to this point is compelling (although the theory of a capitalist “core” and its peripheries has never received universal acceptance). So where do we go from here?
The author who addresses the problem from a Marxist perspective sees the end of capitalism as we know it. He sees the only real alternative as some kind of socialist world government without which the challenges posed in the future cannot be dealt with, especially allocating scarce resources amongst all the claimants. He does not however address how this will be achieved. How for example could powerful states such the US, China and India be persuaded to give up their sovereignty and accept instead a global superstate? The failure to answer in any real way these questions is the main weakness of the book given that this is the “solution” that is posed. However, given the vast ground covered in a short volume, perhaps this is too much to ask.
In seeing the problem in capitalism’s push for never ending and ultimately unsustainable growth, the author does not address the question of whether “endless accumulation” was not also a characteristic of the socialist systems of the former USSR and China of old. The problem may lie in modern industrial economies and technologies whether under capitalism or socialism. Eastern Europe used to be one of the most polluted places on the planet. Would not a world socialist state also find itself under compulsion to increase standards of living in the same way that capitalism and Soviet style socialism did? If the solution (even in part) lies in better and cleaner technologies, however, the author appears to have little faith in the prospect of technologically driven solutions. Whether than scepticism is well founded or not, only time will tell.
Rating: 4 / 5