The sources, contradictions and limitations of the growth in Eastern Asia

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Asian Growth: an expression of the crisis and decadence of capitalism

Up to now capitalism has shown a conspicuous inability to develop the countries where two-thirds of humanity live. Now, with the incredible economic growth in India and China - and throughout East Asia generally - we hear it shouted from the roof tops that from henceforth it will be able to develop more than half the world and that it would be able to go even further if only all the constraints imposed on it were to be eliminated. If wages and working conditions were to be levelled down to those obtaining in China, it is claimed, then growth in the West would also rise to 10% a year.

This raises theoretical and ideological questions of great importance: does the development in East Asia represent a renewal of capitalism or is it no more than a stray occurrence in its on-going crisis? To answer this question we will consider the phenomenon throughout the whole of the sub-continent, though we will examine China more closely as it is the most publicised and the most representative example.

Some questions for revolutionary theory posed by development in the Asian sub-continent

1) In 25 years of economic crisis and ‘globalisation'[1] (1980-2005), Europe has increased its GDP (Gross Domestic Product) by a factor of just 1.7, the United States by 2.2 and the world by 2.5. India, on the other hand, has managed to increase it four-fold, developing Asia six-fold and China ten-fold. This means that the latter has developed 4 times more rapidly than the international average and it has done so during a period of crisis. Therefore, over the last two decades, growth in the Asian sub-continent has cushioned the continual fall in the growth rate of international GDP per head of population. This has been uninterrupted since the end of the 1960s: 3.7% (1960-69); 2.1% (1970-79); 1.3% (1980-89); 1.1% (1990-1999) and 0.9% for 2000-2004)[2]. The first question to ask therefore is: will this region of the world escape the crisis that is undermining the rest of the world economy?

2) It took the United States fifty years to double its per capita income between 1865 and the First World War (1914): China has managed to do so in half the time and in the midst of the decadent period and the capitalist crisis. Although 84% of the Middle Empire was rural in 1952, the number of workers in China's industrial sector is now 170 million, that is, 40% greater than in all of the countries of the OECD (123 million). This country is becoming the workshop of the world and employment in the tertiary sector is increasing at a very rapid rate. The transformation of the employment structure is one of the fastest ever to have taken place in the history of capitalism.[3] China has already become the fourth largest economy in the world if its GDP is calculated using the exchange rate of the dollar and it is in second place if the calculation is made in terms of parity in buying power[4]. These facts must obviously lead us to ask if this country is experiencing a genuine primitive accumulation and an industrial revolution, such as occurred in the developing countries during the XVIII and XIX centuries. To put it another way: is it possible for new capitalist countries to emerge during the period of capitalist decadence? Moreover, is it possible for a country to catch up with the others, as was the case during the ascendant period? If China's present rate of growth were to continue, in less than two decades, it would become one of the largest world powers. This is what the United States and Germany did in the XIX century, when they managed to catch up with and overtake England and France, in spite of the fact that they had begun to develop later.

3) The development of China's GDP is also the most dramatic in the entire history of capitalism. It has had an average annual increase of between 8 and 10% over the last 25 years of world-wide crisis. China's growth even exceeds the records attained during the period of prosperity following the war, when Japan grew at a rate of 8.2% per annum between 1950 and 73 and South Korea by 7.6% per annum between 1962 and 1990. What's more, at present this rhythm is much faster and more stable than that of its neighbours who were industrialised earlier (South Korea, Taiwan and Hong Kong). So is China experiencing its own equivalent of the post-1945 economic boom?

4) Moreover, China is not content to simply produce and export basic goods or to re-export goods produced in its workshops for low wages. It is tending more and more to produce and export goods that have a high level of added value, such as electronics and transport equipment. Does this mean that we are about to see a technological development in China similar to that in the NIC (Newly Industrialised Countries: South Korea, Taiwan, Hong Kong and Singapore)? Will China, like them, be able to reduce its dependence on exports and start to develop its internal market? In other words, are India and China no more than shooting stars that will eventually burn out or will they become new major players on the world stage?

5) The rapid formation of an enormous bastion of the international working class in the Asian sub-continent, although young and inexperienced, raises numerous questions about the development of the class struggle in this part of the world and about its influence on the balance of forces between classes at an international level. The increase in the number of class conflicts and the emergence of political minorities are clear signs of this[5]. On the other hand, the low wages and very precarious working conditions in East Asia are used by the bourgeoisie in the developed countries to blackmail (by threatening to re-locate) and to depress wages and working conditions.

These questions can only be answered and the real sources, contradictions and limitations of growth in Asia be assessed, if they are considered within the general context of the evolution of capitalism at an historic and international level. This means that the present development in East Asia must be placed within the framework of the decadent period of capitalism that began in 1914 (Part 1) and in terms of the dynamic of the crisis that re-emerged internationally at the end of the 1960s (Part 2). This alone will enable us to draw out the essential elements relating to Asian growth (Part 3) and these are the analytical axes that will be developed in this article[6].



[1] Read our article "Behind the ‘globalisation' of the economy: the aggravation of the capitalist crisis" in n°86 of this Review.

[2] Sources: World Bank: World Development Indicators 2003 (version on line) and International Economic Perspectives 2004.

[3] Table 1: Different branches' share of produced value and employment (%)

  Primary (agriculture)
Secondary (industry)
Tertiary (services)
  Value Employment
Value
Employment
Value
Employment
1952 51 84
21
7
29
9
1978 28 71
48
17
24
12
2001 15 50
51
22
34
28
Source : China Statistical Yearbook, 2002.

 

[4] This calculation method is more reliable in as far as it is based on a comparison of the price of a basketful of goods and standard services in the various countries, rather than just on the value of the respective currencies in terms of the exchange of goods on the world market.

[5] We refer the reader to our Report on the Conference in Korea, at which there met together a number of groups and elements whose basis is proletarian internationalism and the Communist Left (International Review n°129) and to the internet site of a new internationalist political group which has appeared in the Philippines and which sees its political affiliation as being with the groups of the Communist Left (see our internet site).

[6] Our 17th International Congress (see International Review n°130) devoted a significant part of its work to the economic crisis of capitalism; dealing specifically with the present growth in certain ‘emerging' countries such as India and China, as this seems to contradict the analysis made by our organisation, and by Marxists in general, about the definitive bankruptcy of the capitalist mode of production. It made the decision to publish articles deepening this question in its press, especially the International Review. The present text is a concretisation of this orientation and we think that it makes a valuable contribution to understanding growth in China within the framework of the decadence of capitalism. However the discussions that are taking place at present within our organisation, about the mechanisms that enabled capitalism to experience a spectacular level of growth after the Second World War, are taking up the question of how to understand the present dynamism in the economies of certain ‘emerging' countries, China in particular. This article raises a point of disagreement in that it defends the idea that the wage mass could constitute a soluble outlet for capitalist production, as long as it is not ‘compressed' to a minimum. This is expressed in the following formulation concerning the present ‘globalisation' which "is deformed in that it lowers the wage mass and restrains the basis of accumulation internationally". This is not the opinion presently held by the majority in the central organ of the ICC. The majority holds, for reasons that we cannot go into here, that if capitalism is led to ‘benefit' the working class with a buying power greater than that which is strictly necessary for it to reproduce its labour power, the increased consumption of the workers does not in any way benefit accumulation in a lasting way.