Analysis. In 1978, Deng Xiaoping launched an era of reforms that opened up China to globalization and turned the country into the second world power. While the transition has affected everyone, it has not made everyone better off.

The 40 years that shook capitalism

In December 1978, Deng Xiaoping initiated his reforms in China and the process of opening up the country, marking the beginning of a period of colossal historical transformations for the nation, on such a scale that, if we were examining them in other parts of the world, we would expect to measure their duration in centuries. First of all, we should remember what China was like in 1978: a mostly rural and poor country, ravaged by the excesses of the Cultural Revolution. At the same time, however, we should also highlight the ”foundation” that the Maoist period had laid for such an extraordinary transformation of the country.

In the West, we often tend to say that China entered into modernity thanks to Deng’s reforms, as if before him the country had been steeped in the Middle Ages. In short, this view associates modernity with capitalism. On this issue, many authors have insisted in clarifying certain important aspects. A prominent voice in this regard is Giovanni Arrighi. In Capitalismo e (dis)ordine mondiale (“Capitalism and world (dis)order,” edited by Giorgio Cesarale and Mario Pianta, Manifestolibri, 2010), Arrighi wrote that Deng’s reforms could be implemented thanks to two factors: the “industrious revolution” of the 19th century—a term he borrows from Kaoru Sugihara—and the Socialist revolution.

The “industrious revolution” allowed state institutions to absorb the work of family units in activities that, contrary to the Industrial Revolution in Europe, rewarded the multiplicity of roles rather than specialization. Accordingly, management skills, with a general background of technical skill, were actively developed at the household level.

The second factor was the Socialist revolution, which, according to Arrighi, allowed this legacy to be preserved, and also revitalized and inserted it into the revolutionary narrative: “While the largest increase in per capita income in China has taken place since 1980, the bulk of the improvement in the life expectancy of adults and, to a lesser extent, in the level of literacy, i.e. the essential conditions of well-being, took place before 1980.”

Furthermore, according to Arrighi, the intrinsic characteristics of China—both pre-Maoist, Maoist and after Deng’s reforms—bring with them the possibility that a new Chinese hegemony could be exercised in a manner and with features very different from those of the past. On this issue, however, we are faced with the most difficult question of all: that of the meaning of “market socialism with Chinese characteristics,” the term coined by Deng to define the model that was taking shape—a model regarding which the literature is still divided today.

According to Arrighi, for example, a possible Chinese hegemony would be different from anything in the past on account of three main factors: first of all, this would bring back a worldwide balance in the power relationships between various states; then, it would be a peaceful, non-military development; and third, as Arrighi argues, this could support new economic models, not necessarily “capitalist” ones.

There is, however, an additional factor that is relevant to the debate about what China is now, after 40 years of “opening up”: the fact that the reforms, in addition to considerably improving the average living conditions of the Chinese and allowing room for private initiative, have also created new and potent inequalities and environmental issues. In fact, these reforms were based on the exploitation of workers, low wages and intensive labor, and ended up having the character of a neoliberal operation when they led to millions of workers losing their jobs at state-run enterprises.

Lu Tu is a Chinese sociologist who has voluntarily lived the life of an ordinary worker for several years, and turned her insights from her experiences into a book, Zhongguo xingongren, mishi yu juechi (“The new Chinese workers: a boom without an identity,” Beijing, 2013). Her firsthand experience led her to see how the capitalist accumulation process that started in the ‘90s, with the coup de grace that came after 1989—a real “shock therapy” and “social contract” forcefully enshrined by Deng’s CCP, with the exhortation to “Get rich!” (while the Party would take care of everything else)—has created a new “urban underclass,” which has made China fit into the overall capitalist world, even if protected by the still-prevalent role of the state.

Regarding labor, an inescapable part of the reforms was the privatization campaign, initiated by Deng and then completed by Jiang Zemin. The latter pushed forward a fundamental reform through the theory of the “Three Represents,” which allowed private entrepreneurs to be members of the Communist Party, previously composed mainly of workers and farmers. A prominent example of one of these new members is Jack Ma, the founder of Alibaba, established in 1999 and which is a paradigm of China’s transformation.

The state-owned companies had been the focal point of Maoist industrialization, and they used to be responsible for nearly four-fifths of non-agricultural production. Most of these giants were located in the cities, where they employed around 70 million people in 1980. The first round of dismantling began in 1988, and the process continued, leading to mass layoffs in the late 1990s, when, as Richard Walker and Daniel Buck write in their article “The Chinese Road: Cities in the Transition to Capitalism” (New Left Review, August 2007), “Chinese capitalism experienced its first general overproduction crisis, marking a clear transition from the old economy of scarcity to the new economy of surplus production—meaning abundance for some and atrocious lack for others.” The results were dramatic: by the early 2000s, employment in state-owned enterprises had been cut in half, and 40 million people had had their traditional “iron rice bowl” taken away, the symbol and guarantee of job security in the old state-run enterprises.

For this group of people, mostly middle-aged, the likely course was that they would turn into what Lu Tu observed: an “urban underclass.” In her Social Exclusion and Marginality in Chinese Societies (Hong Kong, 2013), Dorothy Solinger explains that “instead of the rising levels of education and the gentrification of a large part of the working class, as happened in other places in conjunction with economic development, this informalization of the urban economy has represented a regression.” And there is further clear evidence of the fact that the current model still features exploitation, in the form of the workers’ protests, never silenced and never fully resolved, even today, 40 years after the reforms.

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