On 9/6/20 5:01 PM, Richard Modiano wrote:
"China’s state-owned 'corporations' are not profit maximizers per se
like, say, Singapore’s state-capitalist Temasek and similar sovereign
wealth funds. They’re happy to make money when they can. But they’re
not obliged to. Many have been effectively bankrupt for decades but
the government won’t let its 'zombies' fail so rolls over their loans
in perpetuity. In forty years of market reform, not a single
significant SOE has been permitted to go bankrupt. Their existence and
purpose is dictated by the Plan not the market. Thus when the head of
a major state-owned conglomerate was removed for embracing market
economics a bit too enthusiastically, a Beijing University expert on
China’s state enterprises remarked:
There’s a system in place, not just one person. The party’s appointee
draws his position from patronage… and the task is to engage with
state leaders and safeguard government assets, not to maximize profits."
https://spectrejournal.com/why-china-isnt-capitalist-despite-the-pink-ferraris/
I've been in touch with Richard Smith on these questions. When I
commented on his FB page that his article was a reversal of earlier
positions put forward in NLR, he said that he never thought that China
was capitalist, only bureaucratic collectivist. He must have been
influenced by Shachtman. Who knows? All I can say is that if you read
his 1993 NLR article, it would be easy to conclude that if it was not
capitalist, it was going full speed ahead in that direction.
Smith:"As we shall see, it was precisely the failure of market reform to
transform the ‘socialist’ state sector that forced the reform
leadership—desperate to create jobs, to raise tax revenues, and to avoid
the fate of the regimesin East Europe and the Soviet Union—to tolerate
the growth of an initially small but rapidly growing private capitalist
sector. Today, this dynamic and increasingly powerful capitalist economy
within the economy is threatening to bring down the entire bureaucratic
social order and restore capitalism in China. How did this happen?"
For Pete's sake, if looked like this in 1993, how could you not see him
as predicting capitalism's imminent return?
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