Monday, June 22, 2015

China and its road to ecological disaster

“China's ruling class is the nomenklatura, the upper ranks of the 86-million-member Chinese Communist Party. Since the victory of the revolution in 1949, China has been run by the party-army-bureaucratic aristocracy, the leaders of which reside behind the walls of the Zhongnanhai complex adjacent to the Forbidden City. In the 1950s, they nationalized the economy, divided up government administrative and economic management posts among themselves and centralized all surplus extraction. Today, this state-owned economy is run by their children and will soon be run by their grandchildren.”

This article by Richard Smith on the Truth-Out website describes the environmental disaster that is Chinese capitalism.

 Luoyang Zhonggui High-Technology Company had been dumping this industrial waste in fields around their village every day for nine months. The liquid, silicon tetrachloride, was the byproduct of polysilicon production and it is a highly toxic substance. When exposed to humid air, silicon tetrachloride turns into acids and poisonous hydrogen chloride gas, which can make people dizzy and cause breathing difficulties. The land where you dump or bury it will be infertile. No grass or trees will grow in its place. It is poisonous, it is polluting. Human beings can never touch it. Reckless dumping of industrial waste is everywhere in China. Smith observes “It illustrates how the marriage of capitalism and Stalinist bureaucratic collectivism has created a diabolically destructive hybrid economic system, a rogue economy that is ravaging China's environment, ruining the health of Chinese people, rendering more and more of the country unlivable, driving the country to ecological collapse and threatening to bring the whole planet down with it.”

“Beginning in the 1980s and 1990s, the government promoted the development of market-oriented "township and village industries" to promote growth and employment. These industries, the darlings of the World Bank and Western market-enthusiast academics, became notorious polluters.”

The article highlights the fact that “Ironically, China is also a "green technology" leader, the world's largest producer of both windmills and solar panels. Yet in China these account for barely 1 percent of electricity generation. Coal presently supplies 69 percent of China's total energy consumption; oil accounts for 18 percent; hydroelectric, 6 percent; natural gas, 4 percent; nuclear, less than 1 percent; and other renewables including solar and wind, 1 percent. (27) China currently burns 4 billion tons of coal a year; the US burns less than 1 billion; the European Union, about 0.6 billion. China has marginally reduced the carbon intensity of production in recent years by installing newer, more efficient power plants but these gains have been outstripped by relentless building of more power plants. To make matters worse, even when power plants are fitted with scrubbers to reduce pollution, operators often don't turn on the scrubbers because these cut into their profits.”

Smith explains:
 “Since the 1980s, China has built enough new housing to re-house the entire population but the construction boom has become a self-sustaining, perpetual engine of construction for the sake of construction - supply with no demand. And there are not just miles of empty apartment blocks but entire "ghost cities" complete with office towers, hospitals, schools, futuristic airports, museums, universities, libraries, theaters, sports fields, and miles and miles of apartment towers and subdivisions of McMansions - but almost no people. Twenty-one percent of China's urban residents, the wealthy and middle classes, own two urban apartments, some own three or four - all bought for speculation, not to live in, not vacation homes. More than 22.4 percent of urban apartments and houses remained vacant in 2014.  By one estimate, more than 64 million surplus apartments had been built in China, enough to house almost half the population of the United States, yet millions more are under construction. Economists have warned that what China is really building is the biggest real estate bubble in history.”
Millions of peasants have been cleared off the land and dumped into "new towns" around cities where the shoddy new housing is already crumbing as the displaced farmers move in.

Smith tells us that China's rulers preside over the largest and most dynamic economy in the world, a powerhouse of international trade whose state-owned conglomerates count among the largest companies in the world. They profit immensely from their state-owned enterprises' (SOEs) market returns. But they're not capitalists, at least not with respect to the state-owned economy. Communist Party members don't own individual SOEs or shares in state companies like private investors. They collectively own the state, which owns most of the economy. They're bureaucratic collectivists who run a largely state-planned economy that also produces extensively for the market. But producing for the market is not the same thing as capitalism. …SOEs resemble capitalist corporations but they're not driven by the same motor of market competition; they don't face the same incentives and penalties as capitalist firms, at least not to the same extent, and they're not run like capitalist companies. These days China's state sector has all the superficial trappings of a market economy: corporations, CEOs, IPOs, stock markets and so on. The Ministry of Petroleum is now called China National Petroleum Corporation. Baoshan Iron and Steel now calls itself Baosteel Group Corp. and so on. But SOEs aren't "corporations.”

SOYMB blog suggests that the author is trying to make a distinction without a difference. His analysis is most definitely an improvement on John Bellamy Foster who in his article on China and the environment is under the misconception that “the present Chinese emphasis on ecological civilization is that it has emerged out of a broad socialist perspective, influenced by both Marxian analysis and China's own distinct history, culture, and vernacular.” 

He may prefer the term “bureaucratic collectivism” to our own preferred description of such an economy as “state capitalist” but the reality is that despite the outward appearance of the Chinese enterprise there is little to choose from being an employee of Foxconn or any one of the SOEs. The purpose of the employer remains the same, to extract as much surplus value from employees as possible to create profits and it matters little if the owner of the business is the monolithic Chinese government or a collection of little old ladies in a seaside retirement home with their little folios of stocks and share ownership. Appointed and well-rewarded CEOs oversee the exploitation of the work-force and as Smith infers, the only difference is the length of leash the respective managements have.  He also makes a case that “bureaucratic/gangster capitalist power and property has given China's economy a radically different pattern and trajectory of economic development from normal capitalism anywhere in the West.” Once again the specifics and particulars may be be different but has he forgotten all about the Robber Barons of the 19th Century with their private armies assisted by state militias to suppress worker resistance.

Regardless, Richard Smith presents a powerful critique of a system that many still remain enamoured by, state-ownership and a command economy and whatever disagreement we may have over the nature of the Chinese economy one thing we do agree upon is it is not a progressive step in the direction of socialism, as so many proponents of nationalization have claimed it to be. We can share his conclusion:
“I just don't see how China's spiral to collapse can be reversed short of social revolution…Who knows what spark will light the next social explosion?..From workers' strikes to environmental protests to Occupy Central for Love and Peace, these struggles and movements are fragmented, inchoate and unorganized, so far, but they all share a common demand: bottom-up democracy. Therein lies China's best hope.”

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