I would like to follow up my contributions on Luxemburg and pre capitalist markets. Stimulated particularly by the recent article on China which suggested that it is only now that Chinese pre capitalist markets are being exhausted.
I have done some reading on China and India to follow up the idea that because of their large populations and their large apparently peasant economies they are important drivers in the growth of capitalist economies in recent years. I am by no means an expert on these countries but I would like to discuss my preliminary ideas on the topic and look forward to any comments, negative and positive, that would improve the analysis I’ve come to.
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We talk about peasants and widespread poverty across Asia and ChIna and assume this means a pre-capitalist economy is in existence, but is it?
As per Luxemburg’s theory, is there an economy in these areas that can provide a market for the purchase of constant capital from capitalism as per Luxemburg’s theory and therefore contribute in its conversion to capitalism?
Nowadays all countries in the world function as a national capitalist economy and are now part of the capitalist world market. All that can exist in these areas is an internal pre-capitalist market (pcm) and the large growth of the Chinese and Indian economy is attributed by Luxemburgists to this phenomenon as per the example of the article entitled China The New Silk Road.
We must recognise first that all the feudal wealth that capital was able to tap into up till the 19th century has now gone, capitalism dominates the wealth and the production in these countries now. Additionally, it is far too frequent that poverty is conflated with the idea of a feudal structure but this is not necessary so and we must investigate in more depth the actual situation in these regions.
China and India have seen major levels of growth since the 1970s both in terms of population and GDP but despite the large populations and high levels of poverty there are very different internal structures.
China’s industrial base has grown particularly strongly and this process has been based on the investment of foreign and Chinese capital in industrial enterprises.
Many millions of workers have been drawn into urban life from the agricultural communities but this does not appear to have as a result been a process of dismantling of feudal agriculture but a strategic decision by the Chinese state to implement measures to improve efficiency in agriculture and support the expansion of industry..
The Chinese agricultural sector was taken over by the state during Mao’s revolution in the early 1950s and production collectives were established throughout the country. In that the larger landowners were thrown off the land, the collectives established in the early days of Mao were dominated by the party and the state and the whole process was in fact a form of enclosure and nationalisation by the state
Mao began a process of collectivisation in 1950 with the Agrarian Reform Law which gave the land to peasant farmers and threw out the large landowners. By 1953 this was further developed and with an extended programme of collectivisation and more state control of the farms. By the time of the Great Leap Forward (1958-60) however the slow progress of collectivisation was causing problems and inefficiencies. Mao needed to force the process in order to fulfil the objective of enabling China catch up the more developed countries in the world and indeed become more efficient than them.
The following is a summary1 of how the forced communisation of the late 50s functioned.
China’s farmland were amalgamated into 25,000 huge communes, each with about 5,000 families, organised into ‘brigades’ of about 200 families
All decisions – farming methods, sale of crops, prices – was decided by the government; its orders were often stupid/inappropriate, and it merely set impossibly high targets
The commune was supposed to provide its families with all they needed, including hospitals and schools; in some places people handed over all their possessions and went to live in ‘habitation centres’
Lack of initiative
Farmers lost their independence, and worked for a wage; this damaged incentive because it seemed to guarantee food
Peasants needed a passport to travel from one commune to another
Whilst the collectives had been primarily agricultural enterprises, the communes of the Great Leap Forward had several functions, not only with specialist overseeing different aspects of agricultural development but they also became effectively local governments managing all economic and social activities.
During the Great Leap Forward (1958–60), individuals forfeited their private plots to common ownership and wages were equalized. After the economic difficulties of 1959–61, however, the communes were reorganized. Their average size was reduced, more autonomy was granted the local production teams, private plots were returned to farmers, and wages were paid according to the work performed. 2
These structures were clearly not part of a pre capitalist economy. This was a state capitalist organisation with workers being paid wages even if they were self organised structures. The state controlled wages and directed the products and their prices.
Most of self employed and most of these have wages work outside the farm. Most small farms produce cash crops and are not self sufficient in a feudal sense. The first five-year plan’s goal was to maximize agricultural production to pay for increased industrialization and Soviet aid. The way they did this was through collective farming and government ownership of all transportation and most industries, causing all private industries to be socialized by 1955 and having 98% of the farming populations participating in communes by 19573
The agricultural sector remains predominantly small producers with a proportion of large scale farms but there are no bastions of feudal wealth. No major purchasers of capitalist technology to exchange hi-technology for gold and silver.
China’s agriculture is dominated by about 200 million small farms responsible for the majority of national crop production. Although large-scale livestock production has increased, small farms still play an important role in swine and dairy production (NSBC, 2011b). In the crop sector, average farm size is small and land is fragmented. When China completed its Household Responsibility reform, allocating village land equally to all households in each village in 1985 (discussed further in Section 3), average farm size was only 0.7 hectares (Table 2.6). Because land quality can differ widely within villages, in consideration of equity in distribution, each household normally has, on average, three or four plots, and some have more than 10 plots. Around 60 per cent of the plots are less than 0.1ha, and close to a quarter of them are larger than 0.15ha, while the rest are in between. Despite the small average farm size of 0.7 hectares in 1985, this fell gradually to 0.55 hectares in 2000, mainly because of the rising number of rural households and subdivision of land holdings …. Interestingly, the falling trend in farm size reversed after 2000. Average farm size has started to rise moderately in the past 10 years (Table 2.6), driven by the emerging land-rental market and the rapid growth of migration due to urbanisation and industrialisation4
From the 1980s onwards in post Mao China, the communal farms were broken up in the 1980s in favour of a mix of leased and state owned farms with the state remaining highly involved in the setting or production targets, product sales and credit facilities. This led to the establishment of large scale farms producing cash crops but also an increasing number of small family run farms. However there followed a large scale movement of rural workers to the towns and farms again began to increase in size and many set up other business or found work outside the farm5.
Whilst significant numbers of Chinese rural workers have moved to the town for employment they are not feudal serfs converting to capitalism. Neither was the rural economy in general comprised of nobility and serfs. Agriculture employed 81 per cent of labour in 1970. By 2010, however, as the industrial and service sectors grew in importance, the share of employment in agriculture fell to 37 per cent,
46% of workers are self employed 40% of population is rural
This is a very brief summary of the complicated history of Chinese agriculture but is clear that at no point was capitalism realising capital from sales to a feudal economy. Nationalisation and denationalisation ensured that state played a major role in managing the agricultural economy and that any of the small scale farmers that only used themselves and their families as workers were poor and not entirely self sufficient producers either.
The expansion of the Chinese economy can hardly be said to be the result of accumulation enabled by the small and poor peasant farmers whether self sufficient or not.
India’s growth however has been more evident in service industries and wealth appears to be restricted to a smaller percentage of the population
It is less clear with regards to India to say that feudal systems have disappeared in that the caste system retains a major influence and poverty remains widespread appears to have more of a peasant population living in poverty
Changes in land ownership were followed by the commercialization of agriculture, which started to emerge around the 1860s. This brought a shift from cultivation for home consumption to cultivation for the market. Cash transaction became the basis of exchange and largely replaced the barter system. The exported items in the first half of the nineteenth century included cash crops like indigo, opium, cotton, and silk. Gradually, raw jute, food grains, oil seeds, and tea replaced indigo and opium. Raw cotton remained in demand throughout. There was phenomenal growth in the export of agricultural commodities from India: the value of India’s exports is estimated to have risen by more than five hundred percent from 1859–60 to 1906–1907.6
So whilst cash cropping and commodity production emerged early in India, and agriculture still remains the largest element of the economy as around 70% of India's population live in rural areas and their major activity is agriculture, it does not appear possible to say that feudal structures have disappeared. Indeed the Forest Rights Act of 2006 appears to allow tribal communities to obtain rights to protect their traditional areas of forest land7. However this would not appear to apply to anywhere near the majority of agricultural land. For example the following quote is from a project studying rural poverty in India:
Large portions of cultivated land belong to a minority upper social class, which includes rich farmers and landlords, and results in a severely uneven distribution of land. In other words, the majority of people own very little land and as such may have to maintain a feudal relationship with rich landlords. Those not in feudal relationships struggle with a low annual income and often with debt, since the harvests from their lands seldom bring a profit8
In fact most landowners still belong to the upper castes, cultivators to the middle castes and agricultural labourers to the dalit and adivasi (tribal) socially excluded groups.9
Agriculture, dairy, horticulture and related occupations alone employ 52 percent of labour in India and something like a third of the population live in urban areas.
Agricultural production in India can be broadly classified into food crops and commercial crops. In India the major food crops include rice, wheat, pulses, coarse cereals etc. Similarly, the commercial crops or non-food crops include raw cotton, tea, coffee, raw jute, sugarcane, oil seeds etc. Agricultural Production and Productivity in India https://www.yourarticlelibrary.com/agriculture/agricultural-production-and-productivity-in-india/62867 accessed on 19.10.20
A further aspect of the economy to consider is the artisanal industries. Millions are employed in this area and a substantial portion of India exports come from this sector. Whilst a significant portion of this sector will be by independent artisans and hence non capitalist production that does not generate surplus value. This is therefore commodity production for markets at home and abroad and not subsistence production which is the core of pre capitalist markets.
Finally one important aspect of Indian society to consider is the level of poverty.
About 60% of India's nearly 1.3 billion people live on less than $3.10 a day, the World Bank's median poverty line. And 21%, or more than 250 million people, survive on less than $2 a day. … Today, the richest 10% in India controls 80% of the nation's wealth, according to a 2017 report published by Oxfam, an international confederation of agencies fighting poverty. And the top 1% owns 58% of India's wealth. (By comparison, the richest 1% in the United States owns 37% of the wealth.) 10,
More than a third of all those living in poverty globally live in India. It has more poor people than any other country, with one-third of its population –some 400million people –living on less than US$1.25 a day. India has more than double the number of poor people living in China, the country with the second largest population living in poverty, and a comparable number to the whole of sub-Saharan Africa combined.11
It is clear that the levels of poverty and inequality are extremely high. The wealthiest belong to the new technological and service industries and that in the country the wealthy landowners are cash croppers. From this it is also evident that the feudal sectors that do remain are to be found at the poorer end of Indian society. India is no longer a country provided wealth to capitalism from pre capitalist markets, there is no wealth left in this sector of society.
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My conclusion is therefore that it is wrong to see the poor peasant economies in India and China as pre capitalist. These countries have been capitalist countries for a significant period of time and any small pre cap structures that might remain have been stripped of their wealth long since. In no respects can it be seen as sufficient to perform the entirety of capital accumulation as Luxemburg thesis would want to suggest
All comments and corrections are welcome.
2Encylcopedia Brittannica Chinese Agricultural Communes https://www.britannica.com/topic/commune-Chinese-agriculture accessed on 20.10.20
8 Borgen Project Poverty in Rural India: Causes and Measures https://borgenproject.org/poverty-in-rural-india-causes-and-measures/ accessed on 20.10.20
10 Moni Basu, CNN Seeing the new india through the eyes of an invisible woman https://edition.cnn.com/interactive/2017/10/world/i-on-india-income-gap/
11 India Poverty and Aid. 2012 Age Uk https://www.ageuk.org.uk/Documents/EN-GB/For-professionals/Research/India%20and%20Aid%20Devinit.pdf?dtrk=true