Subscribe to continue reading
Subscribe to get access to the rest of this post and other subscriber-only content.
Subscribe to get access to the rest of this post and other subscriber-only content.
Growth that depends in large part on US cooperation goes away when you no longer fulfil the prerequisites of US cooperation.
By Stephen Gowans
August 9, 2023
An article in today’s Wall Street Journal, “U.S. to Ban Some Investments in China,” and relatedly, China’s recent economic tribulations, prompted the following thoughts on what was not too long ago presented by Sinophiles as the world’s paragon economic model.
The take-off Sinophiles celebrate as the outcome of China’s so-called ‘unique’ economic paradigm, began soon after Beijing decided to transition from its role as communist competitor of the United States to capitalist economic partner of its former enemy.
Deng Xiaoping’s “If you can’t beat them, join them” project, opened the gate to US, European, and Japanese investment, which drove the country’s development.
China was—and remains—an investors’ dream. It offered a vast pool of educated, disciplined, low-wage workers, a stable political environment, a government eager to cater to foreign investors, and a huge market—all the ingredients that investors needed to pull in huge returns.
What made the model unique was China’s history, size, and demography, as well as its Communist Party, which had the legitimacy and Washington’s backing to mold China’s vast population—at that time the largest in the world—to its will of catering to foreign investment. The model couldn’t be transferred to other places, because other places lacked the combination of education, political stability, infrastructure, size, proximity to sea routes, and willingness to collaborate with the United States, that made China the world’s premier investment opportunity.
Times have changed.
Having used Western investment to vault to the first ranks of the global capitalist economy, Beijing has embarked on a second transition, this time from US economic partner to US economic competitor. Chimerica, the integration of China into the US economy, with the US as the union’s finance, R&D, and marketing arm, and China as its manufacturing base, has yielded to China 2025, Beijing’s plan to dominate the industries of the future, provoking Washington’s counter-measures to stop it.
As China challenges US supremacy, its once torrid growth has slowed. Direct U.S. investment into China has hit a 20-year low. U.S. venture-capital investment has hit a 10-year low. Without US commitment to building China as the factory floor of the US, EU, and Japan, China’s economic prospects are no longer as sanguine as they once were.
People’s China, contrary to a myth perpetrated by Sinophiles and apostles of multipolarity, didn’t develop in a world of its own making, insulated and kept separate from capitalism, neo-liberalism, US leadership, and the US economy. It developed precisely because it willingly became a part of all these things.
Now that it’s trying to extricate itself from its former submission to US economic leadership in order to vie with US capital for economic supremacy, foreign and venture capital investment is drying up and China’s torrid growth has disappeared in a puff of political reality, viz., growth that depends in large part on US cooperation goes away when you no longer fulfil the prerequisites of US cooperation.
China’s economic model is not so different from the state-led capitalist development of Germany’s Second and Third Reichs or Meiji-restoration Japan that we should regard it as unique; we certainly shouldn’t regard it as socialist.
Nor, given that China’s rulers have adopted a state-led capitalist development model, guided moreover by a nationalist ambition to restore China to the great civilization it once was, should we harbor illusions about the political project of the Chinese Communist Party. It is not the worldwide proletarian revolution, nor even, it would seem, the proletarian revolution in China, but the vaulting of China to supremacy in the world capitalist market—the same ambition of every other capitalist power with heft.
We should not, therefore, regard the political primacy of the communist party in China as investing the country’s rivalry with the US and EU with a character any different from Germany’s earlier rivalry with Britain for supremacy in Europe or Japan’s erstwhile rivalry with the United States for pre-eminence in the Pacific and East Asia.
China is not a paragon, a model for other countries to emulate. It is just one more capitalist power vying for markets, raw materials, investment opportunities, strategic territory, and the power to shape the global economy to its advantage.
Factories in China and Vietnam are struggling to attract young workers, which is bad news for Western businesses accustomed to offshoring jobs at subsistence-level wages.
August 8, 2023
The world’s largest capitalist enterprises, having located their factory floors in low-wage Asia, are running into a big problem: The young people of China and Vietnam, two Asian giants ruled on behalf of Western businesses by Communist parties, don’t want to work in factories at dehumanizing jobs for subsistence-level wages.
The twilight of ultracheap Asian factory labor is emerging as the latest test of the globalized manufacturing model, which over the past three decades has delivered a cornucopia of profits to wealthy investors around the world. American businesses accustomed to bargain-rate labor in Communist-controlled China and Vietnam might soon be reckoning with higher prices.
“There’s nowhere left on the planet that’s going to be able to give you what you want,” said Paul Norriss, the British co-founder of the Vietnam garment factory, UnAvailable, based in Ho Chi Minh City. CEOs of the world’s largest enterprises are going to have to change their business models.
Workers in their 20s routinely drop out of training programs for low-wage factory jobs. Those who stay often work for just a couple of years.
“Everybody wants to be an Instagrammer or a photographer or a stylist or work at a coffee shop,” rather than a factory worker who toils long hours doing mind-numbing tasks for survival-level pay.
In response to the crisis, Asian factories have had to increase wages and adopt sometimes costly strategies to retain workers, from improving cafeteria fare to building kindergartens for workers’ children.
Toy and game maker Hasbro said this year that labor shortages in Vietnam and China had pushed up costs from subsistence-level to barely above subsistence. Barbie-maker Mattel, which has a large production base in Asia, also is grappling with the pressure of higher labor costs in China on corporate profits and bonuses for its hyper-wealthy CEO. Both companies have raised prices for their products, to protect investors’ profits. Nike, which makes most of its shoes in Asia, flagged in June that its product costs had gone up because of higher labor expenses.
For U.S. businesses that have been accustomed to having low-wage workers as a certain and relatively stable part of their business model, that foundation is going to have to be rejiggered.
Starting in the 1990s, China and then other Asian manufacturing hubs integrated into the global capitalist economy, turning nations of poor farmers into nations of poor factory workers. Labor was available at dirt-cheap wages, allowing businesses to expand their margins and reap a cornucopia of profits off the toil of Communist-led workers reduced to the status of machines for producing surplus value.
Now those manufacturing nations are running up against a generational problem. Younger workers, better-educated than their parents and veterans of Instagram, TikTok and other social media, are deciding their work lives shouldn’t unfold in dehumanized toil inside factory walls at barebones pay for the benefit of billionaires in New York and Shanghai.
Demographic shifts are playing a role. Young people in Asia are having fewer children than their parents did, and at later ages, which means they are under less pressure to earn a steady income in their 20s. A booming services sector offers the option of less-grueling work as store clerks in malls and receptionists at hotels.
The problem is acute in China, where urban youth unemployment hit 21% in June even though factories had labor shortages. Multinational companies have been moving production from China to nations including Malaysia, Indonesia, Vietnam and India. Factory owners there said they, too, are struggling to get young people to sign up.
In the past, manufacturers, scouring the globe for workers deprived of all options but to condemn themselves to lives of ceaseless, demeaning toil at wages incapable of supporting their families in anything but conditions of squalor, might simply have moved to less expensive destinations. That’s not so easy these days. There are nations in Africa and South Asia with large labor pools, but many are politically unstable, or lack good infrastructure and trained workforces.
That’s why China has been so attractive to the world’s largest capitalist enterprises. The infrastructure is excellent, the workforce is trained and disciplined, and Chinese workers can be hired to toil long hours for little pay. The Communist Party of China ensures that conditions are highly favorable to investors by making conditions highly unfavorable to workers.
Clothing brands were stung when they expanded into Myanmar and Ethiopia, only to find operations disrupted by unrest and civil war. Bangladesh has been a reliable base for producing clothes, but restrictive trade policies and clogged ports have kept it from making much beyond that.
India has a huge population, and firms seeking alternatives to China are expanding there. But even in India, factory managers are beginning to complain about the difficulties of retaining young workers. Many young people prefer farm life, no matter how gruelling, to equally gruelling lives in factory dormitories in industrial hubs.
Asian factory owners are trying to make the jobs more appealing, including subsidizing kindergartens and funding technical-training programs. Some are moving factories to rural areas where people are more willing to do manual labor, but that puts them farther away from ports and suppliers and forces them to accommodate rural life, including worker absences during harvest.
Christina Chen, the Taiwanese owner of a furniture maker that sells to American retailers such as Lowe’s, decided to move her factory out of southern China four years ago, hoping it would be easier to recruit. She first considered industrial zones near Ho Chi Minh City, but she heard nightmarish stories about workers demanding wages above subsistence levels. How are capitalists to earn fat returns when workers balk at a life of penury?
Young people from developing countries who otherwise might take factory jobs are finding work caring for the growing numbers of the elderly people in developed nations, as well as plugging gaps in those countries’ aging workforces. The pay is low, but above the subsistence-level pay of factory labor back home.
Susi Susanti, a 29-year-old from Indonesia, said she tried factory jobs after graduating from high school. She hated being pressured to work faster by her managers at an electronics factory, and in a second job making shoes. She told her mother she had to do something else.
A six-month training course taught her rudimentary Mandarin, and she set off to work caring for an elderly couple in Taiwan. Her pay is three times as high as she earned in factories back home, she said, and it’s less exhausting. “When the person I’m looking after is doing well,” she said, “I can relax.”
++++
This article is from The Wall Street Journal of August 7, 2023. It has been edited for class perspective. The original article, written by Jon Emont, is titled “The Era of Ultracheap Stuff Is Under Threat.”
Subscribe to get access to the rest of this post and other subscriber-only content.
December 27, 2022
By Stephen Gowans
Recently, The Wall Street Journal reported that “Mr. Putin” is “convinced Russia’s Western enemies” are “seeking to yank Ukraine from Russia’s orbit.” Clearly, the United States and Russia are locked in a struggle over Ukraine; each wants the territory in its own orbit—that is, in its own empire. US efforts to yank Ukraine from the Russian orbit have been largely successful. Russia is yanking back, but it’s unlikely to win the tug of war.
The idea that the war in Ukraine is but one battlefield in a larger war between two empires is difficult to grasp for people whose understanding of imperialism is influenced by dependency theories developed in the immediate post-WWII period. That period was characterized by one capitalist empire, that of the United States, absorbing most of its former capitalist rivals into its orbit. Under US supervision, the now combined powers, once rivals, jointly exploited the periphery.
People who subscribe to this view, whether consciously or through osmosis, look at the world through a lens whose purpose, when the lens was crafted, was to explain the international system at a time when neither Russia nor China existed as capitalist powers and rivalry among capitalist powers was muted by US primacy. Glimpsed through this lens, Russia and China appear as what they once were, but are no longer: socialist counterweights to a capitalist metropolis.
This, to be sure, is a view of a world that expired 30 years ago, when the Soviet Union was succeeded by a capitalist Russia, and China was at least a decade along the path of capitalist development and integration into the US economy as a low-wage manufacturing center.
Today, Russia and China are capitalist powers. But if they appear to some, not as metropolitan powers keen on integrating regions into their own expanding economies, but as powers lying outside the metropolis, as opposed to merely outside the US empire, it’s because they are understood incorrectly as being what they once were, rather than what they have since become. Both powers are external to the US empire (to some degree; China is so only partially), but the US empire is no longer equal to the metropolis; it is now only one part of it.

None of this is to say that theories about metropolitan exploitation of the periphery are wrong, only that the notion that Russia and China are external to the capitalist metropolis is mistaken. The former socialist giants have joined the metropolis, not as a part of a Kautskyist ultra-imperialism led by Washington, but as rivals of the USA, EU, and Japan.
Is there a better theory?
In its emphasis on rivalry among capitalist powers, the classical Marxist theory of imperialism comports more fully with contemporary developments than dependency theories. If we accept that the contemporary international system is marked by an emerging multipolarity, and that the principal powers in the multipolar system are capitalist, then the world of today bears a much stronger resemblance to the late 19th and early 20th centuries, to which the classical Marxist theories of imperialism referred, than it does to the 20th century period of US-led ultra-imperialism.
That’s not to say that the classical Marxist theory is without its problems. But it does say that despite its problems, the classical theory is a better fit with an emerging multipolar world than theories which were developed to explain a world characterized by a US-led metropolis exploiting a periphery, opposed by a socialist Russia and socialist China.
Continuing to see Russia and China as socialist powers that lie outside the metropolis, when they are now large capitalist powers with unconcealed projects of integrating regions into their own economies, is tantamount to applying the geology of the desert to the rainforest, and on this basis, declaring that trees (i.e., an imperialist Russia and an imperialist China) don’t exist.
To summarize, here are four errors that are made by seeing the contemporary multipolar world through a Kautskyist ultra-imperialist lens.
Subscribe to get access to the rest of this post and other subscriber-only content.
Subscribe to get access to the rest of this post and other subscriber-only content.
Colonial politics and imperialism are not healthy, curable deviations of capitalism…they are the inevitable consequence of the very foundations of capitalism. Competition among individual entrepreneurs either to become ruined, or to ruin others; competition between individual countries places before each of them the alternative of their remaining behind, running the risk of [falling behind], or ruining and conquering other countries, thus elbowing their way to a place among the great powers. – V.I. Lenin, “Imperialism and Socialism in Italy”
May 12, 2022
By Stephen Gowans
From The Wall Street Journal we learn that China’s President Xi Jinping has hammered home the need for tighter party control over the economy with a wider role for state enterprises. Under Xi, China’s Communist Party has tried to transition from ‘economics in command’ to ‘politics in command.’
But now “China’s economy is struggling, and its financial markets are suffering. Some economists expect growth to contract this quarter. Millions of graduates are struggling to find jobs.”
Premier Li Keqiang is “helping press Xi to dial back some measures that have contributed to China’s economic slowdown.”
“As a young man, Li pursued a doctorate in economics under a prominent Chinese economist known for advocating Deng Xiaoping’s market-reform agenda and privatizing state firms.”
“Under Mr. Li’s influence, Beijing recently eased a regulatory crackdown on private technology firms, loosened lending to property developers and home buyers, and acted to help some manufacturers”, including Tesla, controlled by Elon Musk, the world’s richest person, “resume production when much of China has been forced into lockdowns by Mr. Xi’s zero-Covid approach.”
As the Marxist sociologist Albert Szymanski once pointed out, communists, like Xi, who choose to operate within the capitalist system soon discover that state policy is structured by capitalism, not by their policy preferences. Decision-makers who defy capitalism’s imperatives find their actions precipitate crises. Humbled, they quickly back peddle.
In a Chinese idiom, economics, i.e., capitalism, is in charge.

I explore this issue in my new book The Killer’s Henchman: Capitalism and the Covid-19 Disaster.
“The political orientations of the people who hold high-level positions in the capitalist state are largely irrelevant. The logic of capitalism structures the policy boundaries within which policy- and decision-makers operate, forcing conservatives, liberals, social democrats, and even communists who elect to work within the capitalist system, to operate within the same narrow pro-capitalist policy space. The prosperity and stability of a capitalist society depends on the private owners of capital accumulating sufficient profits. If they cannot generate enough profit, they cease to invest, and economic activity grinds to a halt. To maintain stability, governments must pursue policies to support the profit-making activities of their business communities. If they choose not to, their only option is to mobilize popular support to bring the economy under public ownership and control, so that investment decisions can be transferred from private hands to the public sphere, from profit-making as its goal to satisfying public needs as its end. There is no middle ground, where working-class interests can be robustly and continually expanded within a capitalist framework at the expense of the capitalist class.”
Capitalism structures state policy, not only in the realm of domestic matters, but in foreign relations, as well. Communists who elect to operate within the capitalist system are constrained to compete with other capitalist states for markets, raw materials, spheres of investment, and strategic territory, vital to their investors and profit-accumulating enterprises. If they are to play the capitalist game, states can no more absent themselves from rivalry with other states— with potential to escalate to war—than a private firm can absent itself from rivalry with its competition.
As two Bolsheviks wrote in their ABC of Communism, each “producer wants to entice away the others’ customers, to corner the market. This struggle assumes various forms: it begins with the competition between two factory owners; it ends in the world, wherein capitalist States wrestle with one another for the world market.” And in the struggle of capitalist states for the world market—in arms, oil and natural gas, rare earths, vaccines, robotics, supercomputers, AI, autonomous vehicles, 5G, and other commodities—lies the potential for war.
There is no doubt that Beijing has chosen to play the capitalist game. It is the centerpiece of its development project. There is, therefore, no option for China to excuse itself from imperialism. If it is to develop along capitalist lines, it must behave as a capitalist state, including by vying with other states for capitalist advantage around the world and indulging billionaires like Elon Musk and Apple’s Tim Cook, capitalists who have grown immensely wealthy by exploiting cheap Chinese labor.
That China’s capitalist development project is under the command of communists, neither negates the reality that the project is one of integration into a world capitalist system based on exploitation, or that, as Xi is finding out, politics in command can be checked by capitalism in command.
As political science professor Minxin Pei told The Wall Street Journal, Xi may be a “leftist deep down, but he has to make tactical compromises over the economy.” That is, the world capitalist economy.
In sum, despite the Communist Party being nominally in charge, and the president being a leftist “deep-down,” China is integrated into the world capitalist economy as a major, if not the major player, by the choice of China’s Communist Party rulers. State policies are not structured by communists seeking to end the exploitation of one human by another, but by the imperatives of the capitalist system Chinese communists have consciously embraced.
The idea that China is socialist is as far-fetched as the idea the moon is made of cheese.
By Stephen Gowans
April 21, 2022
In Lenin’s view, imperialism is immanent in capitalism as a global system. Inasmuch as China is one of the most significant players in this system, if not the most significant, the implication of Lenin’s view is that imperialism is also immanent in China.
A number of people who claim to be anti-imperialists and to understand the concept thoroughly, to the point of holding workshops, participating in panels, and writing articles to instruct others on what it means, have, despite their professed knowledge, defined the concept in a manner that departs significantly from the way in which imperialism has been understood historically. Until Russia invaded Ukraine, there was little mystery about what imperialism is. Now, it has become altogether different from what it has always been understood to mean. And while many of these same people claim at least a passing knowledge of Lenin’s view of imperialism, the Bolshevik leader would have been baffled by their understanding.
In opposition to commonly accepted definitions and the Leninist tradition, the anti-imperialist docents have developed a view of imperialism that resonates less with Lenin and more with a view developed by Shintoist Japan in the 1930s. According to this view, imperialism is North American and Western European domination of the world. Anti-imperialism is the effort of a rising power to liberate its neighbors from this domination by folding nearby states into its own (declared or undeclared) regional empire (the Greater East Asian Co-Prosperity Sphere in Japan’s case.)

Hence, Russia’s efforts to “liberate” Ukraine from the United States and Europe, and to incorporate parts or all of it into a palingenetic Russian empire, is viewed as anti-imperialist. Likewise, China’s new security agreement with the Solomon Islands is seen as anti-imperialist—a weakening of US and Australian domination of the islands. While it certainly is this, it is also an effort to define a security architecture that allows Beijing to protect Chinese investments abroad and to safeguard shipping routes that are vital to the unimpeded access of Chinese billionaires to foreign markets and sources of raw materials.
The Leninist view of imperialism as inherent in a globalized capitalism can be used as a lens to parse the New York Times’ reporting on the recent China-Solomon Islands security agreement. According to a leaked draft of the accord, Beijing is empowered to dispatch police, troops, and warships to the islands to protect Chinese investments and Chinese citizens, an agreement that resonates with multiple similar accords struck between Washington and countries in Latin America and beyond.
The Times, tacitly defining US ruling class interests as humanity’s interests, presents the accord as a danger to the world. “China’s leader, Xi Jinping, and his army now have a foothold in an island chain that played a decisive role in World War II and could be used to block vital shipping lanes,” the newspaper warns. What isn’t mentioned is that the United States and its satellites control the shipping lanes. The deal allows China to challenge US control of the maritime routes on which it depends—or more precisely, on which its capitalist economy depends—for access to foreign markets and sources of raw materials. The deal doesn’t threaten humanity so much as it threatens US leverage over a capitalist rival.
The Times continues its diatribe against the accord by noting the pact’s imperialist features, all the while avoiding any mention of the similar accords Washington, London, Paris, and other imperialist capitals have signed with numberless governments around the world for centuries, sometimes at the point of a gun.
“To start,” the accord “provides a broad mandate for China to potentially intervene when its foreign investments and diaspora are under threat, as it stretches its projection of military power.”
The newspaper quotes Richard Herr, a law professor at the University of Tasmania, who observes that “With the pact, China is essentially trying to establish a principle of using military force to protect its economic presence in places where it claims the government does not have the capacity.” In this, China acts no differently than the United States.
“What the Solomons’ deal tells the world, at the very least,” he adds, “is that China believes that if its major projects are threatened, it wants a right to protect them.” Again, this is standard US procedure, or, to put it another way, standard procedure for major capitalist powers. Consider also France’s intervention in Africa to protect access to and investments in uranium mines, vital to an important form of French energy.
“The lesson for the rest of the world is that China is looking to rebalance the global order in its favor,” Herr continues. “And whether that means opening trade routes, establishing a military facility or signing a security agreement, Beijing will act to benefit its own interests.” Herr goes on to say that Beijing will do so at the expense of “democracy and an open and free world”, euphemisms for the US empire. In other words, the expansion of a Chinese empire comes at the expense of a US empire.
What the Times’ article shows, albeit in a clearly chauvinist way, is that large capitalist powers and blocs—the United States and its satellites, Europe (to the extent it acts independently of the United States), China, and Russia—seek to fashion the world order in their favor. They seek to bring as much of the world economy as possible under their own control. This means security arrangements and treaties to protect their investments abroad, and to safeguard their access to foreign markets, sources of raw materials, strategic territory, and investment opportunities. To be sure, the United States is by far the strongest of the rivals, but that doesn’t mean that Russia and China are not driven by capitalist compulsions to dominate the planet every much as strong as those that drive US expansion—a compulsion to settle everywhere, to nestle everywhere, to establish connections everywhere.
With multiple capitalist power centers existing within the framework of a globalized economy, rivalry for profit-making opportunities is inevitable. The rise of one power center at the expense of another may appear to be anti-imperialist, but only so far as the declining power is erroneously viewed as the sole imperialist, i.e., as the lone capitalist power in search of investment opportunities, markets, and raw materials. The decline of US and Western European influence in East Asia with the rise of Japan beginning in the 1930s may have appeared to the naïve as an anti-imperialist victory—this was certainly the illusion Tokyo aimed to create—but it was an illusion all the same. So too is China’s rise an illusory anti-imperialist victory. It may be a victory against China’s domination by the United States, as the rise of the United States was a victory against US domination by Britain, or Germany’s rise was a challenge to British hegemony, but it is in no way a victory over the persistence of capitalist rivalry for markets, raw materials, investment opportunities, and strategic territory. It is simply a continuation of this process.
Imperialism within a globalized capitalist economy can be envisaged along two axes. One axis concerns the process of large countries exploiting profit-making opportunities in smaller countries. The anti-imperialist docents err in thinking of imperialism in these terms alone. The other axis concerns the rivalry among large countries for profit-making opportunities within the borders of the countries its rivals dominate and within the borders of its rivals themselves. The first axis is one of large countries dominating weaker ones. The second is of large countries competing among themselves to monopolize the sum total of the world’s profit-making opportunities—to shape the global order in their favor, to use terminology favored by the New York Times.
The security pact between China and the Solomon Islands is a manifestation of imperialism, in three acts:
Capitalism need not be invoked to define China and Russia, along with the United States, France, and Great Britain—the permanent members of the UN Security Council—as imperialist states. As victors of WWII, these self-defined “model” nations have assigned to themselves rights and privileges senior to those of all other nations. Russia, for example, can test a new ballistic missile with impunity, by virtue of its permanent membership on the council and access to veto powers, while participating, along with China, in the imposition of international sanctions on a small country, North Korea, for doing precisely the same.
Large countries, including the largest of all, China, have historically dominated their weaker neighbors, even if some of them, China not excepted, were dominated themselves. A fortiori, we would expect large capitalist countries, driven by an expansionary capitalist logic, to continue in this manner. China shows no evidence that it is an anomaly or a departure from expectation.
Subscribe to get access to the rest of this post and other subscriber-only content.