Why China is not a capitalist country – China’s theory is in line with Marx (but not Stalin)

By John Ross

It is simply an objective fact that China has made in total the greatest contribution to human well-being of any country – in particular to the most historically oppressed sections of humanity, those therefore of special interest to socialists throughout the world.

· China has lifted 853 million people out of internationally defined poverty – 75% of the reduction of the number of those living in internationally defined poverty in the world. To give a scale of proportion, this is considerably larger than the entire population of the European Union, and greater than the entire population of the continent of Latin America – imagine what an achievement it would be hailed in the West if the entire population of the EU, or the whole of Latin America, had been taken from poverty!

· China’s average life expectancy is over two and a half years longer than would be expected from its per capita GDP – showing that non-income social and environmental factors are above average and adding to life expectancy.

· China’s is the most rapid growth of major economy in all human history. From 1978 to 2016 China’s annual average GDP growth was 9.6% and its economy increased in size by 3,200%. China’s annual average increase in per capita GDP was 8.5% – its per capita GDP increased by over 2,200%. For comparison in the same period US per capita GDP increased at an annual average 1.6% and by a total of 80%.

Given these unprecedented historical achievements it is, therefore, a matter of the very greatest importance to know what social system produced such enormous improvements in human well-being?

It is also necessary to be entirely serious on such gigantic social changes and draw appropriate conclusions. If capitalism is capable of lifting 853 million people out of poverty, extending their life expectancy by two years longer than would be expected from the country’s level of economic development, and producing the greatest economic growth in human history then capitalism remains a highly progressive system. Furthermore, another country with a similar social and economic system to China, Vietnam, has lifted a further 31 million people from internationally defined poverty. In Vietnam people live an astonishing nine years longer than would be expected from its level of per capita GDP. Or why, to take another example, do people in Cuba live over six years longer that would be expected from its level of economic development, so that life expectancy in Cuba is actually higher than in the US?

Those on the right of politics who believe such enormous human progress was due to capitalism however immediately have to answer a very puzzling question. Why does this enormous reduction in poverty, and indication of social well-being compared to the level of economic development, appear in those countries which call themselves socialist – China, Vietnam, Cuba – and not in ones which proclaim themselves capitalist? After all, if it was capitalism that produced such great gains in human well-being you would expect the main gains to appear in self-proclaimed capitalist countries, or at least to be spread equally across all capitalist countries, and not for 78% of the reduction in the number of those living in poverty in the world to be in the states declaring themselves to be socialist: China and Vietnam. This claim by the right wing in politics clearly makes no sense.

Unfortunately, however, there are also some on the left who give excessive credit to capitalism and believe such enormous steps forward for humanity were taken by capitalism – that is, they believe China or Vietnam are capitalist countries. Actually, many of those who make such statements have not seriously absorbed what gigantic progress it is for humanity to have such achievements. But it also reflects an ideological confusion derived from Stalin and not Marx – a wrong conception of what socialism is. In that conception deriving from Stalin, even the earliest stage of socialism will be characterised by close to 100% state ownership of the means of production – the system introduced into the USSR in 1929 by Stalin with the First Five Year Plan. The problem is that this was not Marx’s conception and it is not in line with Marx’s theory. The economic system of China and Vietnam, and the one Cuba is currently moving more towards, is certainly not the economic system of Stalin but it is the economic system of Marx. One of the most important features of China’s economic debates was precisely a ‘return to Marx’. The following article analyses the relation between Marx, Marxism and China’s economic theory and reform policies.

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Deng Xiaoping as a Communist naturally explicitly formulated China’s economic policy in Marxist terms – China’s economic reform policies were seen as the integration of Marxism with the specific conditions in China. More precisely Deng stated: ‘We were victorious in the Chinese revolution precisely because we applied the universal principles of Marxism-Leninism to our own realities.’[1] Consequently: ‘Our principle is that we should integrate Marxism with Chinese practice and blaze a path of our own. That is what we call building socialism with Chinese characteristics.’[2]

Regarding China’s economic reform policies Deng noted, in Marxist terms, that China was in the socialist and not the (higher) communist stage of development. Large scale development of the productive forces/output was the prerequisite before China could make the transition to a communist society: ‘A Communist society is one in which there is no exploitation of man by man, there is great material abundance, and the principle of from each according to their ability, to each according to his needs is applied. It is impossible to apply that principle without overwhelming material wealth. In order to realise communism, we have to accomplish the tasks set in the socialist stage. They are legion, but the fundamental one is to develop the productive forces.’[3]

More precisely, Deng noted that China was in the ‘primary stage’ of socialism, which was fundamental in defining policy: ‘‘The Thirteenth National Party Congress will explain what stage China is in: the primary stage of socialism. Socialism itself is the first stage of communism, and here in China we are still in the primary stage of socialism – that is, the underdeveloped stage. In everything we do we must proceed from this reality, and all planning must be consistent with it.’[4]

The fundamental characterisations by Deng have been maintained to the present. Thus for example in July 2011 President Hu Jintao stressed that ‘China is still in the primary stage of socialism and will remain so for a long time to come’.[5] Or, while speaking to the UN premier Wen Jiabao noted ‘Taken as a whole, China is still in the primary stage of socialism’.[6] Xi Jinping has stressed: ‘It is important to stress the basic foundation of China being in the primary stage of socialism.’[7]

One consequence of this understanding was that the previous economic policy of China – including such efforts as ‘the Great Leap Forward’, and the attempt to collectivise peasant production – had been misconceived. ‘From this perspective, a serious error in the past was the leftist belief that China could skip the primary stage and practice full socialism immediately.’[8]

Deng and his successors’ economic policies were a turn from those pursued previously in post-1949 China, which had been broadly based on the economic policies pursued in the USSR after Stalin’s introduction of the First Five Year Plan in 1929. The First Five Year Plan in the USSR introduced essentially total state ownership and comprehensive planning. But Stalin’s post-1929 economic policies were not in line with what had been suggested by Marx’s writings, and – as we shall see – Deng’s approach was in fact far closer to that envisaged by Marx.

The conclusion drawn from the contrast between a primary socialist stage of development – as faced China – and the principle of a communist society was that, in the primary stage of socialism, the distribution of incomes would continue to be regulated by ‘to each according to their work’ rather ‘from each according to their ability, to each according to their needs’, as would become the case under communism. As Deng put it: ‘We must adhere to this socialist principle which calls for distribution according to the quantity and quality of an individual’s work.’[9]

In Marxist theory, as outlined by Marx in the opening chapter of Capital, economic distribution according to work/labour is the fundamental principle of commodity production – and commodity production necessarily implies a market.[10] Therefore, in this primary socialist period, a market would also continue to exist – hence the eventual Chinese terminology of a ‘socialist market economy.’ This analysis as presented by Deng Xiaoping and his successors is clearly in line with Marx himself – presented in a compressed form as it assumes knowledge of Marx which exists in China but which cannot be assumed in the West.

​Marx’s analysis

It is clear Marx envisaged that the transition from capitalism to communism would be a prolonged one, noting in The Communist Manifesto: ‘The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the State, i.e., of the proletariat organised as the ruling class; and to increase the total productive forces as rapidly as possible.’[11]

The ‘by degree’ should be properly noted; Marx thereby clearly envisaged a period during which state-owned property and private property would exist. China’s system, after Deng, of simultaneous existence of sectors of state and private ownership is therefore clearly more in line with Marx’s conceptualisation than Stalin’s introduction ‘all at once’ of virtually 100 per cent state ownership in 1929.

Deng’s formulations on communist society being regulated by ‘to each according to their need’ versus the primary stage of socialism regulated by ‘each according to their work’ were also drawn from Marx – as Deng Xiaoping was clearly aware. Marx set this clearly and trenchantly in his Critique of the Gotha Programme.

In the Critique of the Gotha Programme Marx made an interconnected series of comments concerning the post-capitalist transition to a communist society. First he explained what this meant about the nature and circumstances of this transition: ‘What we are dealing with here is a communist society, not as it has developed on its own foundations, but on the contrary, just as it emerges from capitalist society, which is thus in every respect, economically, morally, and intellectually, still stamped with the birth-marks of the old society from whose womb it emerges.’[12]

In such a transition, Marx went on to outline, payment for labour, and distribution of products and services, necessarily had to be ‘according to work’ even within the socially/state owned sector of the economy, and not yet on the communist principle of ‘according to need’.

Marx explained: ‘Accordingly, the individual producer receives back from society – after the deductions have been made – exactly what he gives to it. What he has given to it is his individual quantum of labour. For example, the social working day consists of the sum of the individual hours of work; the individual labour time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labour (after deducting his labour for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labour cost. The same amount of labour which he has given to society in one form, he receives back in another.

‘Here obviously the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values…. as far as the distribution of the latter among the individual producers is concerned, the same principle prevails as in the exchange of commodity equivalents: a given amount of labour in one form is exchanged for an equal amount of labour in another form.

‘Hence, equal right here is still in principle – bourgeois right… The right of the producers is proportional to the labour they supply; the equality consists in the fact that measurement is made with an equal standard, labour.’[13]

In such a society in transition inequality would necessarily still exist: ‘one… is superior to another physically or mentally and so supplies more labour in the same time, or can labour for a longer time; and labour, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labour… it tacitly recognises the unequal individual endowment and thus the productive capacities of the workers as natural privileges. It is, therefore, a right of inequality in its content like every right. Right by its very nature can consist only as the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable by an equal standard only insofar as they are made subject to an equal criterion, are taken from a certain side only, for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Besides, one worker is married, another not; one has more children than another, etc etc. Thus, given an equal amount of work done, and hence an equal share in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right would have to be unequal rather than equal.’[14]

Marx considered only after a prolonged transition would payment according to work be replaced with the ultimately desired goal, distribution of products according to members of society’s needs: ‘Right can never be higher than the economic structure of society and its cultural development which this determines.

‘In a higher phase of communist society… after the productive forces have also increased with the all-around development of the individual, and all the springs of common wealth flow more abundantly – only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his abilities, to each according to his needs!’[15]

In other words, Marx here fills out the meaning of ‘by degree’ in the Communist Manifesto, to explain that the transition to a communist society would be a prolonged process where elements of bourgeois or capitalist forms of organisation could not be eliminated immediately and where inequality continued.

Some of Deng’s formulations noted above literally quote Marx almost word for word. Deng’s insistence on the formula that in the transitional period reward would be ‘according to work’ and not ‘according to need’ was clearly in line with Marx’s analyses.

The conclusions drawn from this, that in the first stages of socialism both commodity-production and markets would continue to exist, informed the economic policies pursued by Deng and his successors in China from 1978.

In 1978 the previous nigh-on 100 per cent state ownership of industry in China, was replaced with the policy of ‘zhuada fangxiao’ (keep the large, let go the small) – maintaining the large enterprises within the state sector and releasing the small ones to the non-state sector. Together with policies to aid the development of a new private sector, this created an economic structure in China that was more in line with that envisaged by Marx than the close to total state ownership introduced in the USSR by Stalin after 1929.

It is notable that in the USSR itself a number of economists opposed Stalin’s post-1929 policies on the same or related grounds – including Buhkarin, Trotsky, Kondratiev and Preobrazhensky. [16]Their works and the debates on these issues in the USSR were, however, almost unknown as these disagreements were ‘resolved’ by Stalin killing those economists who disagreed with him and banning their works. However, several accounts have been published outside the USSR. [17]

As a result of this suppression of different views in the USSR, China’s economic debates preceded primarily with reference to China’s conditions and Marx himself, and not any preceding debates that had taken place in the USSR.

It was post-1929 Soviet policy that departed from Marx’s analysis, not Deng’s and China’s. It is clear that China’s post-reform economic policy is in line with Marx’s analysis of socialism and the economics of post-capitalist societies, although it is not in line with Stalin’s – but that is because Stalin’s departed from Marx.


[1] Deng, X. (28 August 1985). ‘Reform is the only way for China to develop its productive forces’. In X. Deng, Selected Works of Deng Xiaoping 1982-1992 (pp. 140-143). Beijing: Foreign Languages Press

[2] Deng, X. (21 August 1985). ‘Two kinds of comments about China’s reform’. In X. Deng, Selected Works of Deng Xiaoping 1982-1992 (1994 ed., pp. 138-9). Foreign Languages Press.

[3] Deng, 28 August 1985

[4] Deng, X. (29 August 1987). ‘In everything we do we must proceed from the realities of the primary stage of socialism’. In X. Deng, Selected Works of Deng Xiaoping 1982-1992 (pp. 247-8). Beijing: Foreign Languages Press.

[5] Xinhua. (2011, July 1). ‘China still largest developing country: Hu’. Retrieved February 2, 2012, from China Daily: http://www2.chinadaily.com.cn/china/cpc2011/2011-07/01/content_12817816.htm

[6] Xinhua. (2010, September 24). ‘Premier Wen expounds ‘real China’ at UN debate’. Retrieved February 2, 2012, from China Daily: http://www.chinadaily.com.cn/china/2010WenUN/2010-09/24/content_11340091.htm

[7] Xi Jinping ‘Study, Disseminate and Implement the Guiding Principles of the 18th CPC National Congress’ Xi Jinping The Governance Of China (Kindle Locations 165-166). Foreign Languages Press. Kindle Edition.

[8] Hsu, R. C. (1991). Economic Theories in China 1979-1988. Cambridge and New York: Cambridge University Press. P.11

[9] Deng, X. (28 March 1978). Adhere to the principle “to each according to his work”. In X. Deng, Selected Works of Deng Xiaoping (pp. 117-118). Honolulu: University Press of the Pacific..

[10] Marx, K. (1867). Capital Vol.1 (1988 ed.). (B. Fowkes, Trans.) Harmondsworth: Penguin.

[11] Marx, K., & Engels, F. (1848). ‘Manifesto of the Communist Party’. In K. Marx, & F. Engels, Collected Works (1976 ed., Vol. 7, pp. 476-519). London, UK: Lawrence and Wishart. P504.

[12] Marx, K. (1875). ‘Marginal notes on the programme of the German Workers Party’. In K. Marx, Karl Marx Frederich Engels Collected Works (1989 ed., Vol. 24, pp. 81-99). London: Lawrence and Wishart. P.85

[13] ibid, p.86

[14] ibid, pp86-87

[15] ibid, p.87

[16] Bukharin, N. (1925). ‘Critique de la plate-forme économique de l’opposition’. In L. Trotsky, E. Préobrajensky, N. Boukharine, Lapidus, & Osttrovitianov, Le Débat Soviétique Sur La Loi de La Valeur (1972 ed., pp. 201-240). Paris: Maspero; Kondratiev, N. D. (n.d.). The Works of Nikolai D Kondratiev (1998 ed.). (N. Makasheva, W. J. Samuels, V. Barnett, Eds., & S. S. Williams, Trans.) Pickering and Chatto; Preobrazhensky, E. (1921-27). The Crisis of Soviet Industrialization (1980 ed.). (D. A. Filzer, Ed.) London: MacMillan.

[17] See for example: Jasny, N. (1972). Soviet Economists of the Twenties. Cambridge: Cambridge University Press; Lewin, M. (1975). Political Undercurrents in Soviet Economic Debates. London: Pluto Press.


The above article was previously published on Learning from China