“Socialism with Chinese Characteristics” and the Socialist Market Economy (SME) of the PRC: A Hamiltonian Federalist Analysis

Is the PRC a Socialist nation-state? Certainly, the CPC in Beijing is adamant about the PRC being Socialistic, to which this author is inclined to agree (even if my interpretations are more nuanced). The consensus outside the PRC, however, is muddled and affected by perceptions toward “Socialism with Chinese Characteristics.” The question continues to invite debate among all kinds of people, be they Marxist Socialists and non-Marxist Socialists as well as Liberal Capitalists. Either the PRC is a Socialistic nation-state or the PRC has undergone so many reforms since the reign of Deng Xiaoping that it resembles more like a Mixed Economy.

Those who believe the PRC is Socialistic will point to the presence of Marxism-Leninism and the interpretations upheld by the CPC. Although billionaires have risen to considerable influence, portions of the Chinese economy privatized and open to foreign Kapital and the Iron Rice Bowl somewhat broken, the vast majority remains under State and collective ownership. There are a number of market mechanisms to warrant the existence of private economic interests, from privatized firms to multinational corporations, but their ability to influence the PRC is limited to whatever is permitted in regulations set aside by the CPC.  

The usage of the term “Socialist Market Economy” should be seen as a sign of where the PRC is within the political-economic order of things. As far as this author is concerned, the PRC is without a doubt a low-tier Planned Economy, and the CPC is fully aware of this within their own economic policies. The “Commanding Heights,” the most important areas of the Chinese economy, still remain under State and collective ownership. Since no viable alternative to STEP existed by the 1990s, certain market relations had to be maintained in order to support the economic planners. 

It is understandable for the term “State Capitalism” to be appropriate here, provided one is willing to argue that aspects of the Socialist Market Economy was derived from Vladimir Lenin’s concept of “New Economic Policy” (NEP) for the early Soviet Union. State Capitalism is of course a transitory phase insofar as its goal is to not only deter Liberal Capitalism but also serve as a stopgap measure until a different way of realizing the Command Economy becomes available. Yes, it is normal to find traces of problems in State Capitalism that are related to the “Capitalism” in Liberal Capitalism, but their effects will not be as drastic.

Of course, this has certainly not stopped various Marxist Socialists from claiming that the PRC is no longer Socialist but some kind of Liberal Capitalist regime. They point to the number of concessions that the CPC has made with the Liberal Capitalists, since the Socialist Market Economy was intended to adapt to the conditions of Economic Globalization. They also claim that too many compromises have been made and it is only a matter of time before Liberal Capitalism returns. Some of the claims are understandable, but not necessarily accurate in light of the various attempts to adjust and adapt to changing economic conditions. Whether the CPC continues to maintain a proper balance until it can return to proper Socialism again depends on what Beijing decides going forward. 

In fact, this question can be addressed without having to rely on the Work-Standard for a detailed analysis. The PRC is trying to become the economic superpower of Eurasia and the CPC seeks to fulfill that role by restoring the balance of power. That puts “Chinese Socialism” at odds with the Liberal Capitalists and the very world order that the Jeffersonians had created in 1945. It remains to be seen whether the CPC still intends to spread any genuine form of Socialism to other countries as a viable alternative to Liberal Capitalism. This author has yet to find convincing evidence that such is the case since there is more evidence pointing to the Chinese focusing more on their own priorities rather than trying to present Chinese Socialism as an alternative.

Chinese Socialism could help enable the creation of different “Socialisms with National Characteristics,” but it will require the input of the other nation-state. A Socialism that reflects the national traditions, norms, customs and values of the people. Even in spite of the market reforms, the concept still has the potential to reshape the world not in China’s image, but in the image of multipolarity with Socialism as the predominant model. Every nation-state can be Socialistic, but only one can represent the very ontological Dasein (Existence) of that nation-state in the Heideggerian sense.  

Therefore, the question this author presents is not whether the PRC is Socialist or Liberal Capitalist. It is “to be Chinese under Socialism” or “to not be Chinese under Liberal Capitalism.” The PRC clearly chose the former: Mainland China is Chinese and Socialism will enable the Chinese to be themselves. That is the real meaning behind the significance of “Socialism with Chinese Characteristics” from a Western understanding. Always remember that there is a difference between what Socialism is as defined by a people and what Socialism ought to be according to an “ism.”     

Categories: Compendium, Economic History, Philosophy, Politics

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