3. The Enterprises Are Managed with Capitalist Methods

Before going into the plans of the Deng/Hua leadership to modify the administration of the enterprises, we once again contrast the fundamental aim of production in capitalism with that of production in socialism. Karl Marx writes in Theories of Surplus-Value about the aims of production in capitalism:

“The direct purpose of capitalist production is not the production of commodities, but of surplus-value or profit (in its developed form), the aim is not the product, but the surplus-product…. In this conception, the workers themselves appear as that which they are in capitalist production – mere means of production, not an end in themselves and not the aim of production.” (Marx: Theories of Surplus-Value, Part II, Progress Publishers Moscow, 1968, pp. 547 and 548; quoted in: Willi Dickhut, The Restoration of Capitalism in the Soviet Union, p. 65)

The book, The Restoration of Capitalism in the Soviet Union, formulates as the aim of production in socialism:

“In socialism, on the other hand, the requirements of people are the center of attention. The means of satisfying these requirements are provided by ‘continuous’, i.e., uninterrupted by crises, ‘expansion’ and ‘continuous perfection of production’. Increasing production is no end in itself but, as Stalin explicitly points out, the chief means of satisfying the requirements of society.” (Willi Dickhut, The Restoration of Capitalism in the Soviet Union, p. 66)

Our day-to-day experience shows that in our country the focus of production is not on the interests of the people but on the profit-seeking of a small handful of monopolist bosses. The supply of petroleum, for instance, is artificially reduced to force the price of gasoline and fuel oil up to giddy heights – the big oil corporations skim off enormous profits. In the interest of profit, production is rationalized, come hell or high water, to uphold the ‘competitiveness of the German economy’ while jobs are cut and workers dismissed.

In socialism this is different. Not only are there steady or sinking prices that ensure a continuously rising standard of living for the people. Also, the jobs are safe. In socialism, too, there is rationalization, but the decisive difference is that the results of rationalizing are to the benefit of society as a whole and not at the expense of the workers’ jobs.

Let us have a look at this, taking as example the shipyard in Dalian (Talien):

“In China’s socialist society, labour power is not a commodity. The workers are no longer wage slaves selling their labour power. There are jobs for all who can work. ‘Employment agencies’ are things of the past. The labour force has grown steadily in factories and other enterprises in pace with rising production. But enterprises can neither hire workers on their own, nor cut down the work force. All adjustments must be made by government labour departments according to an overall plan. Also uniform wage scales are set by the state for all state enterprises.

Since the start of the Great Cultural Revolution, the fast-growing shipyard has absorbed many new workers and staff. They are young people from villages, from the army and from technical institutes or institutes of higher learning, sent by government labour departments in a unified way. During this period some 3,000 Hungchi Shipyard workers and staff members were reallocated by these departments to help set up new shipyards.” (Peking Review, No. 16, 1976, p. 23)

The new leadership in China wants to use different methods in the management of the enterprises. Hu Qiaomu (Hu Chiao-mu), for instance, President of the Chinese Academy of Social Sciences, declares:

“Still, we have overextended the scope of relying on purely administrative means to do our work and, moreover, have unnecessarily set up many overstaffed, inefficient organs, so much so that they hinder us from making use of simplified ways of economic management left us by capitalism and hinder us from running economic affairs according to economic laws.” (Peking Review, No. 47, 1978, p. 13)

A socialist state is, at least in the beginning, unable to avoid applying the law of value and other elements of capitalism in the building of the socialist economy. Lenin also did that in building up the economy of the Soviet Union. He was emphatically in favor of utilizing capitalist elements for the building of socialism. At the same time, however, he advocated equally emphatically the political control by the masses of the working people: the more capitalist elements, the stricter the control.

Deng Xiaoping and his lot, however, do exactly the opposite today: They extend the levers of economic management and restrict proletarian control. Needless to say that today’s leaders in China will defend themselves against such an ‘insinuation’ and protest that they have not betrayed class struggle.

In his report at the Second Session of the Fifth National People’s Congress in June 1979, Hua Guofeng names the class enemies which “will still be” there: “counter-revolutionaries and enemy agents, criminals and political degenerates,” also new exploiters and “remnants of the gang of four and of the old exploiting classes including the few unreformed landlords and rich peasants.” Allegedly, all of these together are “few in number”! (Beijing Review, No. 27, 1979, pp. 9 and 10)

It is clear that, in this extensive enumeration of class enemies in socialism, Hua cannot name the most important enemy: the new bourgeoisie! After all, he personally is its leading representative. Not mentioning the new bourgeoisie as the main enemy of socialism is the confession that it already is in the corridors of power. All the talk of class struggle against an enemy that is “few in number” is only made with the intention to distract attention from the revisionist course the new leadership has taken. In their methods and arts of deception, the new leaders have proven to be eager followers of their revisionist masters in the Soviet Union, who restored capitalism in the Soviet Union after the Twentieth Congress of the CPSU in 1956. The Soviet ‘reforms’ also started with the liquidation of the central economic administration and the delegation of authority to decide to regional organs and factory directors.

This program is not just the theory of some professor of economics, it is meanwhile being put into practice at all levels, as set out above. The revolutionary committees in the factories have been disbanded; the enterprises are for the most part already being managed by solely responsible factory directors. The appropriate specialist staff is already being trained. Under the title “Modern Management,” Beijing Review, No. 12, 1979, reports:

“A class for the study of management of enterprises was started by the State Economic Commission on March 3. … [The managers] grasp the socialist economic law and learn from the advanced experience of foreign and domestic enterprises in modern management. They will discuss problems relating to management and make suggestions for improvement.” (p. 7)

The factory management members appointed and controlled by the revolutionary committees are substituted by specialists appointed by the government, i.e. managers.

Not only is the administration of the publicly owned enterprises being decentralized and authority delegated to the individual enterprises (in other words to the respective factory managements), the new Chinese revisionists go even further. With diverse measures like establishing factory funds and extending and reintroducing bonus schemes they are trying to win the working people of China for their ‘socialist modernization’.

“So that each and every enterprise is truly and fully responsible for its own economic results, so that the entire body of staff members and workers as well as the leadership will show concern for production and do their best to increase output, reduce expenditure of labour and raise labour productivity, it is imperative to implement the following principle: Enterprises which are run well and have achieved big economic results should receive more material rewards while those which are not run very well should receive less, or even undergo certain material penalties.” (Peking Review, No. 41, 1978, p. 8 – emphasis added)

In contrast to this, we already stated clearly in the book, The Restoration of Capitalism in the Soviet Union:

“The increase of labor productivity in capitalism is based on the striving of the capitalists for maximum profits, which are obtained by the development of technology in conjunction with increased intensity of labor, the latter being achieved by material incentives and pressure applied in various ways. In short: securing of maximum profits through increased exploitation of labor.

The increase of labor productivity in socialism is based on the endeavor to satisfy and raise the material and cultural needs of society as a whole, which is accomplished by constantly improving the level of technology in conjunction with expanding and deepening socialist consciousness as the motivation for work. In short: satisfaction of the growing needs of all working people by highly developed technology in conjunction with the socialist consciousness of the masses.” (Willi Dickhut, The Restoration of Capitalism in the Soviet Union, p. 124)

The practices of the new leadership, however, do not encourage the state enterprises to hold a socialist competition for the quickest possible development of the economy. The center of attention of the individual enterprise is no longer the common aim, the building of socialism and the raising of the living standard of the whole people, but the enterprise’s own interest in gaining material rewards by manufacturing as well and as quickly as possible with as little expenditure as possible.

The revisionist economists call it the ‘profitability’ of the individual enterprises. Clearly, with such a way of managing enterprises the amount of profit plays quite a different role: the ratio of profit to the expenditure of material and labor determines the degree of profitability of an enterprise. As a consequence, every enterprise has an interest in gaining as much profit as possible. This violates the principle ‘from each according to their abilities, to each according to the work they do,’ by which the new revisionists swear so eagerly at other times. An ordinary worker who happens to work in a profitable enterprise will get higher wages or a higher bonus than a worker in an unprofitable enterprise, even though both have to work equally hard.

According to the ‘profitability’ outlined above, unprofitable enterprises will in the long term fall by the wayside; they may even incur certain penalties. The gearing of production in its entirety to the requirements of the people makes the existence of such enterprises that are ‘unprofitable’ at first glance absolutely necessary. The unified central planning and management of industry by the state of the dictatorship of the proletariat makes conscious allowance for these enterprises operating at a loss, which receive corresponding grants.

Contrary to capitalism, socialism knows a different, a higher kind of profitability, as Stalin teaches:

“If profitableness is considered not from the stand-point of individual plants or industries, and not over the period of one year, but from the standpoint of the entire national economy and over a period of, say, ten or fifteen years, which is the only correct approach to the question, then the temporary and unstable profitableness of some plants and industries is beneath all comparison with that higher form of stable and permanent profitableness which we get from the operation of the law of balanced development of the national economy and from economic planning, which save us from periodical economic crises disruptive to the national economy and causing tremendous material damage to society, and which ensure a continuous and high rate of expansion of our national economy.” (Stalin, Economic Problems of Socialism in the U.S.S.R., Peking 1976, p. 24)

So we must not be surprised but, to the contrary, see clearly that if the course taken now in developing the Chinese economy is pursued any longer it must inevitably lead to economic setbacks and, in the long run, to crises. The ones to pay for it and suffer the consequences are not those who adopt this course, the new leaders of state and economy, the higher functionaries of the administration apparatus, the factory directors and managers, but the workers and the peasants.