1 00:00:05,080 --> 00:00:08,320 Speaker 1: Welcome, Dick. It happened here. I'm your host, Na Wong, 2 00:00:08,960 --> 00:00:11,040 Speaker 1: and today we're going to be talking about something a 3 00:00:11,080 --> 00:00:14,880 Speaker 1: little bit different. In the last half decade, a growing 4 00:00:14,880 --> 00:00:18,320 Speaker 1: political focus on China has transformed a cottage industry of 5 00:00:18,360 --> 00:00:23,799 Speaker 1: American China watchers into a sprawling metropolis of pseudoanalysis, a 6 00:00:24,000 --> 00:00:27,040 Speaker 1: veritable machine that turns out racialized fear of the Chinese 7 00:00:27,120 --> 00:00:31,000 Speaker 1: other and transforms it into economic papers that close with 8 00:00:31,080 --> 00:00:35,760 Speaker 1: quote unquote policy solutions about the so called China problem. 9 00:00:36,040 --> 00:00:38,879 Speaker 1: In these circles, a consensus is emerging about what they 10 00:00:38,920 --> 00:00:42,440 Speaker 1: call Chinese state capitalism and its supposed risk of the 11 00:00:42,520 --> 00:00:47,120 Speaker 1: United States. China's economy, they argue, is not a free 12 00:00:47,120 --> 00:00:51,320 Speaker 1: market economy like that of the United States. Instead, China's 13 00:00:51,400 --> 00:00:53,920 Speaker 1: large array of state owned industries and its willingness to 14 00:00:54,000 --> 00:00:58,440 Speaker 1: use investments to incentivize specific kinds of research while protecting 15 00:00:58,480 --> 00:01:02,680 Speaker 1: companies from pure market competition means that the state, and 16 00:01:02,720 --> 00:01:06,000 Speaker 1: not the market, dictates the course of the Chinese economy. 17 00:01:06,920 --> 00:01:10,360 Speaker 1: Under these assumptions, the Chinese economy poses two major threats 18 00:01:10,360 --> 00:01:14,520 Speaker 1: to American companies in the American security state. First, state 19 00:01:14,560 --> 00:01:18,000 Speaker 1: owned industry is subsidized by the state will inevitably outcompete 20 00:01:18,080 --> 00:01:21,800 Speaker 1: American companies because American companies can't match the sheer quantity 21 00:01:21,840 --> 00:01:24,880 Speaker 1: of capital held by the Chinese state, which violates the 22 00:01:24,880 --> 00:01:27,920 Speaker 1: fairness and competitiveness of the free market by making companies 23 00:01:27,959 --> 00:01:32,280 Speaker 1: compete on unequal grounds. Second, the close ties between the 24 00:01:32,360 --> 00:01:36,080 Speaker 1: Chinese government and state owned industries and even private Chinese 25 00:01:36,080 --> 00:01:39,000 Speaker 1: companies means that their technology will be used by the 26 00:01:39,040 --> 00:01:44,480 Speaker 1: CCP to strengthen its military by stealing American technology. The 27 00:01:44,560 --> 00:01:47,880 Speaker 1: problem with this consensus at a fundamental level is that 28 00:01:47,920 --> 00:01:51,720 Speaker 1: it's utterly uninterested in how Chinese state owned enterprises known 29 00:01:51,760 --> 00:01:56,320 Speaker 1: as soees actually functioned. And this is a real problem 30 00:01:56,920 --> 00:01:59,760 Speaker 1: because Chinese sos are not what you or the people 31 00:01:59,840 --> 00:02:04,120 Speaker 1: righting American forum policy think they are. So today we're 32 00:02:04,120 --> 00:02:05,960 Speaker 1: going to take a dive into the belly of the 33 00:02:06,040 --> 00:02:10,800 Speaker 1: state and figure out how soos actually function and determine 34 00:02:11,000 --> 00:02:13,880 Speaker 1: what this actually does to the prevailing theories about how 35 00:02:14,040 --> 00:02:17,040 Speaker 1: Chinese economy works and what it means for both the 36 00:02:17,080 --> 00:02:21,000 Speaker 1: American and Chinese working classes. But before we get into 37 00:02:21,040 --> 00:02:23,400 Speaker 1: the structure of the SOE, we need to talk about 38 00:02:23,440 --> 00:02:28,560 Speaker 1: state capitalism. State capitalism is an old term. Most of 39 00:02:28,560 --> 00:02:30,560 Speaker 1: the people writing about it will trace it back to 40 00:02:30,639 --> 00:02:35,359 Speaker 1: Lenin's New Economic Policy, a massive shift towards the market 41 00:02:35,680 --> 00:02:39,200 Speaker 1: in the Soviet economy of the early twenties. The New 42 00:02:39,280 --> 00:02:43,919 Speaker 1: Economic Policy relegalized private capitalist firms, albeit in a much 43 00:02:43,960 --> 00:02:47,960 Speaker 1: reduced capacity, with a very large state sector driving the 44 00:02:47,960 --> 00:02:52,000 Speaker 1: economy as a whole, a condition Lenin dubbed state capitalism. 45 00:02:52,919 --> 00:02:55,880 Speaker 1: But even using state capitalism to describe both the New 46 00:02:55,919 --> 00:02:59,520 Speaker 1: Economic Plan and the current situation in China reveals a 47 00:02:59,520 --> 00:03:04,440 Speaker 1: profound misunderstanding of both Lenin's NEP and the modern Chinese economy. 48 00:03:05,440 --> 00:03:09,720 Speaker 1: For one thing, during the NEP, state owned industries accounted 49 00:03:09,720 --> 00:03:13,399 Speaker 1: for at least seventy percent of Soviet industrial output, increasing 50 00:03:13,400 --> 00:03:16,960 Speaker 1: to seventy seven percent by the end of the policy. Meanwhile, 51 00:03:17,080 --> 00:03:21,200 Speaker 1: despite the height behind Chinese state capitalism, china state sector 52 00:03:21,240 --> 00:03:25,520 Speaker 1: represents a measly forty percent of China's economy, uniquely high 53 00:03:25,560 --> 00:03:28,640 Speaker 1: for a capitalist economy, but quite literally the inverse of 54 00:03:28,639 --> 00:03:31,160 Speaker 1: the relationship between capitalist frames and the state. In the 55 00:03:31,320 --> 00:03:36,000 Speaker 1: USSR that sixty percent of China's GDP is private and 56 00:03:36,040 --> 00:03:38,320 Speaker 1: only forty percent is generated by the state. And don't 57 00:03:38,320 --> 00:03:41,000 Speaker 1: look too closely at that forty percent, because only thirty 58 00:03:41,000 --> 00:03:43,640 Speaker 1: percent of it is from actual state industries, the other 59 00:03:43,680 --> 00:03:46,640 Speaker 1: ten percent resulting from the regular function of the state itself. 60 00:03:47,600 --> 00:03:51,160 Speaker 1: Shows what actually drives the Chinese economy, not the state 61 00:03:51,200 --> 00:03:55,440 Speaker 1: at all, but the market. This is very important because 62 00:03:55,440 --> 00:03:57,600 Speaker 1: the story of the Chinese economy in the last forty 63 00:03:57,680 --> 00:04:00,440 Speaker 1: years is not simply the story of a state run 64 00:04:00,520 --> 00:04:04,320 Speaker 1: command economy transforming into a market economy. It is also 65 00:04:04,920 --> 00:04:09,640 Speaker 1: and arguably primarily, the story of the market consuming the 66 00:04:09,680 --> 00:04:13,480 Speaker 1: state from the inside out. This becomes more clear the 67 00:04:13,560 --> 00:04:16,680 Speaker 1: closer you look at how state owned enterprises are actually structured, 68 00:04:17,560 --> 00:04:20,080 Speaker 1: and it is here the weakness of the very term 69 00:04:20,200 --> 00:04:24,800 Speaker 1: state owned enterprise comes into focus. Academics and journalists write 70 00:04:24,800 --> 00:04:27,880 Speaker 1: about state owned enterprises as if the word means one 71 00:04:28,000 --> 00:04:31,240 Speaker 1: specific thing, but the reality is that there are an 72 00:04:31,440 --> 00:04:34,800 Speaker 1: enormous number of different kinds of sos, with different structures 73 00:04:35,000 --> 00:04:39,040 Speaker 1: and different relationships to the state. When regular people think 74 00:04:39,080 --> 00:04:41,640 Speaker 1: about state ownership, it tends to invoke the specter of 75 00:04:41,640 --> 00:04:45,920 Speaker 1: the USSR in a Soviet style sooe, and will take 76 00:04:45,960 --> 00:04:48,880 Speaker 1: as an example of Chinese SOE the Socialist period, which 77 00:04:48,880 --> 00:04:54,520 Speaker 1: functions similarly. The firm is literally a government department. For example, 78 00:04:54,680 --> 00:04:59,160 Speaker 1: in nineteen seventy nine, China established the Bureau of nonferest 79 00:04:59,240 --> 00:05:01,760 Speaker 1: Metals and this is the best name you're going to 80 00:05:01,760 --> 00:05:05,320 Speaker 1: get out of the CCP. In this entire episode, that 81 00:05:05,480 --> 00:05:08,280 Speaker 1: bureau was in charge of running a luninium production. The 82 00:05:08,320 --> 00:05:11,400 Speaker 1: government ministry simply ran the mines and the refineries and 83 00:05:11,440 --> 00:05:14,760 Speaker 1: the factories directly, and everyone working in the factory was 84 00:05:14,760 --> 00:05:19,320 Speaker 1: a direct government employee paid by the state. This is 85 00:05:19,360 --> 00:05:22,320 Speaker 1: also pretty close to how the American Post Office is structured. 86 00:05:23,080 --> 00:05:27,279 Speaker 1: But Soviet SOEs crucially were not firms that competed for 87 00:05:27,400 --> 00:05:30,560 Speaker 1: money in the market. They worked towards a production plan 88 00:05:30,600 --> 00:05:34,160 Speaker 1: and were assigned resources based on their output. In this way, 89 00:05:34,279 --> 00:05:37,560 Speaker 1: they're closer to a municipal water service than most modern SOEs. 90 00:05:38,160 --> 00:05:40,560 Speaker 1: Their job, in theory was to make a thing or 91 00:05:40,600 --> 00:05:45,680 Speaker 1: a service, not make money. Modern Chinese soees, despite sharing 92 00:05:45,800 --> 00:05:50,040 Speaker 1: the same name as or socialist period predecessors, are very different. 93 00:05:51,080 --> 00:05:54,680 Speaker 1: For one thing, Modern Chinese SOEs, as well as a 94 00:05:54,680 --> 00:05:57,440 Speaker 1: lot of other state owned companies like the Saudi government's 95 00:05:57,440 --> 00:06:00,760 Speaker 1: oil companies Saudi a Ramco, are not directly part of 96 00:06:00,800 --> 00:06:04,839 Speaker 1: the government at all. Instead, they're structured as regular corporations 97 00:06:04,839 --> 00:06:08,320 Speaker 1: whose stock happens to be owned by the governments. This 98 00:06:08,440 --> 00:06:11,359 Speaker 1: shareholding relationship is one of the most common kinds of 99 00:06:11,400 --> 00:06:15,279 Speaker 1: modern SOEs, but as we'll see, they make ownership and 100 00:06:15,320 --> 00:06:20,200 Speaker 1: management structures increasingly complex. The other major difference from Soviet 101 00:06:20,279 --> 00:06:23,239 Speaker 1: firms is that companies like Saudi a Ramco and modern 102 00:06:23,320 --> 00:06:26,839 Speaker 1: Chinese soez are for profit companies. I don't exist to 103 00:06:26,839 --> 00:06:30,000 Speaker 1: provide a service, they exist to make money. This gets 104 00:06:30,120 --> 00:06:33,880 Speaker 1: very weird very quickly. For one thing, while we tend 105 00:06:33,920 --> 00:06:36,280 Speaker 1: to think of state owned enterprises as belonging to the 106 00:06:36,360 --> 00:06:42,800 Speaker 1: national governments, municipal, provincial, and even disher Can county governments 107 00:06:42,800 --> 00:06:46,400 Speaker 1: in China have their own SOEs. On a conceptual level, 108 00:06:46,440 --> 00:06:49,640 Speaker 1: this makes sense. China's economy is the size of a continents, 109 00:06:49,640 --> 00:06:54,080 Speaker 1: and individual provinces have the geographic size, population, natural resources, 110 00:06:54,080 --> 00:06:57,479 Speaker 1: and economy of entire nations, which means that provincial soees 111 00:06:57,520 --> 00:07:01,440 Speaker 1: can rival national firms. But this also means that state 112 00:07:01,440 --> 00:07:05,040 Speaker 1: owned industries from different levels of government are directly competing 113 00:07:05,080 --> 00:07:08,360 Speaker 1: with each other on the market. This is something beyond 114 00:07:08,360 --> 00:07:11,520 Speaker 1: the experience of previous theorists of the state and capitalism. 115 00:07:12,120 --> 00:07:15,400 Speaker 1: Frederick Engels, the close friend of Karl Marx, was able 116 00:07:15,440 --> 00:07:19,880 Speaker 1: to predict the rise of capitalist state owned industries writing quote. 117 00:07:20,000 --> 00:07:23,560 Speaker 1: At a further stage of evolution, this form also becomes insufficient. 118 00:07:23,960 --> 00:07:27,040 Speaker 1: The official representative of the capitalist state will ultimately have 119 00:07:27,080 --> 00:07:31,400 Speaker 1: to undertake the direction of production. This necessity for conversion 120 00:07:31,440 --> 00:07:34,280 Speaker 1: into state property is felt first in the great institutions 121 00:07:34,320 --> 00:07:39,000 Speaker 1: for intercourse and communication, the post office, the telegrams, the railways. 122 00:07:39,720 --> 00:07:42,800 Speaker 1: If the crisis demonstrates the incapacity of the bourgeoisie for 123 00:07:42,880 --> 00:07:46,960 Speaker 1: managing any longer modern productive forces, the transformation of the 124 00:07:46,960 --> 00:07:50,360 Speaker 1: great establishment for production and distribution into joint stock companies 125 00:07:50,400 --> 00:07:54,000 Speaker 1: and state property shows how unnecessary the bourgeoisie are for 126 00:07:54,040 --> 00:07:57,080 Speaker 1: that purpose. All the social functions of the capitalists are 127 00:07:57,120 --> 00:08:01,360 Speaker 1: now performed by salaried employees. The capitalist has no social 128 00:08:01,400 --> 00:08:05,960 Speaker 1: function than that of pocketing dividends, tearing off coupons, and 129 00:08:05,960 --> 00:08:09,280 Speaker 1: gambling at the stock exchange, with the different capitalists to 130 00:08:09,320 --> 00:08:12,960 Speaker 1: spoil one another of their capital. At first, the capitalist 131 00:08:12,960 --> 00:08:16,240 Speaker 1: mode of production forces out the workers. Now it forces 132 00:08:16,240 --> 00:08:18,840 Speaker 1: out the capitalists and reduces them, just as it reduced 133 00:08:18,840 --> 00:08:22,160 Speaker 1: the workers to the ranks of the surfplus population, although 134 00:08:22,200 --> 00:08:25,600 Speaker 1: not immediately into those of the industrial reserve army, but 135 00:08:25,680 --> 00:08:28,760 Speaker 1: angles imagined the state as a collective capitalist, replacing the 136 00:08:28,800 --> 00:08:32,439 Speaker 1: individual capitalist. What no one could have foreseen was capitalists 137 00:08:32,440 --> 00:08:35,280 Speaker 1: break was capitalism breaking the collective nature of the state, 138 00:08:35,440 --> 00:08:39,079 Speaker 1: entirely hollowing it out until its chunks competed with each 139 00:08:39,120 --> 00:08:42,040 Speaker 1: other on the market. This is the state of modern 140 00:08:42,120 --> 00:08:47,319 Speaker 1: Chinese SOEs. These SOEs are capitalists, firms subject to market discipline. 141 00:08:47,480 --> 00:08:50,040 Speaker 1: They can and will fail and go under if they 142 00:08:50,040 --> 00:08:53,520 Speaker 1: aren't making enough money, and the government can and will 143 00:08:53,720 --> 00:08:56,439 Speaker 1: tear them apart and force the still state owned pieces 144 00:08:56,440 --> 00:08:59,920 Speaker 1: to compete against each other. These state owned industries also 145 00:09:00,200 --> 00:09:03,000 Speaker 1: largely are not supposed to be monopolies. Firms they get 146 00:09:03,040 --> 00:09:06,440 Speaker 1: too large and powerful can and will be broken up 147 00:09:06,440 --> 00:09:09,280 Speaker 1: and the parts once again set to compete against each other. 148 00:09:10,720 --> 00:09:15,199 Speaker 1: Weirder still, these SOEs are also listed on the stock markets, 149 00:09:15,600 --> 00:09:19,040 Speaker 1: meaning individual capitalists, and as we'll see later, even foreign 150 00:09:19,080 --> 00:09:22,520 Speaker 1: firms can buy forty nine percent stakes and nominally state 151 00:09:22,520 --> 00:09:27,640 Speaker 1: owned industries. Now, if the state doing market competition against 152 00:09:27,720 --> 00:09:31,920 Speaker 1: itself wasn't weird enough for you, let me introduce another complication. 153 00:09:32,800 --> 00:09:36,839 Speaker 1: The State Owned Asset Supervision and Administration Commission of the 154 00:09:36,880 --> 00:09:41,239 Speaker 1: State Council and no the state owned Asset Supervision and Administration. 155 00:09:41,280 --> 00:09:43,360 Speaker 1: Commission of the State Council is not a name that 156 00:09:43,400 --> 00:09:46,160 Speaker 1: sounds any better in Chinese. If you have a bureaucracy 157 00:09:46,200 --> 00:09:49,760 Speaker 1: rooted in Leninism, the product is a veritable corricopia of 158 00:09:49,800 --> 00:09:52,559 Speaker 1: the most absolutely dogshit name you've ever heard in your 159 00:09:52,679 --> 00:09:56,960 Speaker 1: entire life. This commission is better known for obvious reasons 160 00:09:57,000 --> 00:10:00,360 Speaker 1: as Sassak, and it is the government body that owns 161 00:10:00,440 --> 00:10:03,160 Speaker 1: the shares of most of the largest firms in China, 162 00:10:03,200 --> 00:10:07,400 Speaker 1: which are known as the national champions. Now you could 163 00:10:07,400 --> 00:10:10,000 Speaker 1: be forgiven for thinking you now understand the structure of 164 00:10:10,040 --> 00:10:13,720 Speaker 1: Chinese soez. Sasak, which is a part of the state, 165 00:10:14,000 --> 00:10:17,280 Speaker 1: owns the SOEs. Bob's your uncle, Everyone goes home for 166 00:10:17,320 --> 00:10:21,520 Speaker 1: the night, and the episode ends right here. Unfortunately, it 167 00:10:21,600 --> 00:10:24,880 Speaker 1: is way more convoluted than that. When I said SASAQ 168 00:10:24,920 --> 00:10:27,880 Speaker 1: owns the shares of the largest firms in China, that's 169 00:10:27,880 --> 00:10:31,680 Speaker 1: only true in a technical sense. What Sasak actually owns 170 00:10:31,720 --> 00:10:35,160 Speaker 1: are the shares of massive holding companies, companies that exist 171 00:10:35,200 --> 00:10:38,360 Speaker 1: on paper but whose existence is purely dedicated to owning 172 00:10:38,400 --> 00:10:42,160 Speaker 1: the shares of other companies. These holding companies own the 173 00:10:42,200 --> 00:10:44,960 Speaker 1: shares of the publicly traded companies. You might have heard of, 174 00:10:45,040 --> 00:10:48,640 Speaker 1: like Sinopek China state owned oil companies. And this is 175 00:10:48,679 --> 00:10:51,559 Speaker 1: where the simplistic narrative of the Chinese soe, a single 176 00:10:51,600 --> 00:10:55,000 Speaker 1: firm owned by the state under its direct political control, 177 00:10:55,240 --> 00:10:59,080 Speaker 1: completely falls apart, because again, the state doesn't really own 178 00:10:59,160 --> 00:11:02,280 Speaker 1: these firms directly. What they own is a holding company 179 00:11:02,600 --> 00:11:08,280 Speaker 1: that owns the stock of the sues. That holding company, however, 180 00:11:08,600 --> 00:11:12,000 Speaker 1: is the actual basis of the organization of Chinese state ownership. 181 00:11:12,559 --> 00:11:15,480 Speaker 1: The building blocks of the Chinese state economy aren't single 182 00:11:15,520 --> 00:11:19,320 Speaker 1: state owned enterprises at all. The economy is actually composed 183 00:11:19,360 --> 00:11:23,160 Speaker 1: of what are called business groups. American listeners may not 184 00:11:23,200 --> 00:11:25,199 Speaker 1: be very familiar with business groups, but there are a 185 00:11:25,240 --> 00:11:27,960 Speaker 1: common sight in what became known as the Tiger economies, 186 00:11:28,400 --> 00:11:31,559 Speaker 1: a series of economies that's all rabid industrial development in 187 00:11:31,600 --> 00:11:34,440 Speaker 1: the post World War two era, largely fueled by the 188 00:11:34,440 --> 00:11:37,600 Speaker 1: demands of American military supply lines for its wars in 189 00:11:37,679 --> 00:11:42,439 Speaker 1: Korea and Vietnam. The two most infamous are the Japanese Keretsu, 190 00:11:42,880 --> 00:11:45,920 Speaker 1: the successor to the old Japanese zaibatsu that dominated the 191 00:11:46,000 --> 00:11:49,520 Speaker 1: pre war Japanese economy and which were to some extent 192 00:11:49,600 --> 00:11:53,800 Speaker 1: broken up after the war, and Korean chabel conglomerates. These 193 00:11:53,920 --> 00:11:57,120 Speaker 1: massive groups of businesses are either owned by the same 194 00:11:57,160 --> 00:12:00,199 Speaker 1: people or families in the case of the chabel, or 195 00:12:00,280 --> 00:12:03,920 Speaker 1: linked by mutual shareholding of each other's companies. Like kedatsu, 196 00:12:05,920 --> 00:12:09,240 Speaker 1: the groups cooperate and coordinate the business strategy instead of 197 00:12:09,280 --> 00:12:12,160 Speaker 1: competing against each other, which allows them to carry out 198 00:12:12,200 --> 00:12:14,880 Speaker 1: a level of long term planning that's sometimes difficult for 199 00:12:14,960 --> 00:12:19,480 Speaker 1: individual for profit companies. Chinese economists sent to Japan to 200 00:12:19,480 --> 00:12:22,440 Speaker 1: study kedatsu in the seventies and eighties returned with policy 201 00:12:22,480 --> 00:12:26,120 Speaker 1: in hands, But the business groups that eventually emerged in 202 00:12:26,160 --> 00:12:28,920 Speaker 1: the Chinese economy after an extended process of trial and 203 00:12:29,080 --> 00:12:32,960 Speaker 1: error are different than their Korean or Japanese counterparts. Where 204 00:12:33,040 --> 00:12:36,360 Speaker 1: chabel are organized around families and Kedatsu are organized around 205 00:12:36,360 --> 00:12:39,360 Speaker 1: a commercial bank that provides financing for the companies and 206 00:12:39,400 --> 00:12:43,520 Speaker 1: the group, Chinese businesses are organized by those holding companies 207 00:12:43,520 --> 00:12:46,679 Speaker 1: one hundred percent owned by Sassak and therefore the Chinese State. 208 00:12:47,679 --> 00:12:51,640 Speaker 1: Those holding companies, also sometimes called core companies, own the 209 00:12:51,679 --> 00:12:55,160 Speaker 1: majority of the stock of a variety of public betraded companies. 210 00:12:55,520 --> 00:12:59,000 Speaker 1: They also own a finance company which finances the companies 211 00:12:59,360 --> 00:13:02,680 Speaker 1: and work with research institutes which carry out scientific and 212 00:13:02,720 --> 00:13:06,920 Speaker 1: research development for the entire group. These research institutes, which 213 00:13:06,920 --> 00:13:10,520 Speaker 1: are often university affiliated, are technically nonprofit, but take money 214 00:13:10,559 --> 00:13:13,679 Speaker 1: from the core companies in exchange for the research development 215 00:13:13,720 --> 00:13:19,360 Speaker 1: they do. Chinese business groups are often massive, organizing hundreds 216 00:13:19,400 --> 00:13:22,720 Speaker 1: of companies who also maintain trade and supply relations with 217 00:13:22,840 --> 00:13:26,760 Speaker 1: hundreds more companies technically outside the group. These groups are 218 00:13:26,840 --> 00:13:30,120 Speaker 1: organized by what's called articles of grouping, which the core 219 00:13:30,160 --> 00:13:32,800 Speaker 1: holding company who owns the stock, and the rest of 220 00:13:32,800 --> 00:13:36,960 Speaker 1: the companies get those companies to sign. These articles form 221 00:13:36,960 --> 00:13:39,400 Speaker 1: a top down structure for the entire group that also 222 00:13:39,440 --> 00:13:42,880 Speaker 1: includes council and management bodies for the entire group, with 223 00:13:43,000 --> 00:13:46,240 Speaker 1: representatives from each of the companies in the group. This structure, 224 00:13:46,520 --> 00:13:49,760 Speaker 1: in theory, is how the CCP transmits policy down from 225 00:13:49,800 --> 00:13:53,440 Speaker 1: single holding companies to all of their downstream subsidiaries and allies. 226 00:13:54,360 --> 00:13:57,760 Speaker 1: And this is important because, at least in theory, business 227 00:13:57,760 --> 00:14:00,640 Speaker 1: groups are supposed to carry out government and dose and 228 00:14:00,679 --> 00:14:04,040 Speaker 1: economic developments, but in the real world this is a 229 00:14:04,080 --> 00:14:09,080 Speaker 1: significant challenge because again, even individual business groups comprise hundreds 230 00:14:09,080 --> 00:14:12,079 Speaker 1: of companies, and the states grasp on them as often tenuous, 231 00:14:12,600 --> 00:14:14,800 Speaker 1: as seen by a wave of state owned companies that 232 00:14:14,880 --> 00:14:18,040 Speaker 1: theoretically are supposed to make things getting into real estate 233 00:14:18,040 --> 00:14:21,040 Speaker 1: speculation a problem the CCP has been attempting to deal 234 00:14:21,040 --> 00:14:23,080 Speaker 1: with since two thousand and eight and only really has 235 00:14:23,080 --> 00:14:26,240 Speaker 1: gotten under control in the last two years. But you 236 00:14:26,320 --> 00:14:31,640 Speaker 1: know who will not do housing speculation instead of making 237 00:14:31,680 --> 00:14:34,960 Speaker 1: ads for you. It is the companies and the products 238 00:14:35,000 --> 00:14:49,160 Speaker 1: and services that support this podcast. And we're back so 239 00:14:49,280 --> 00:14:52,280 Speaker 1: confronted with the enormity of the scale of Chinese business groups, 240 00:14:52,560 --> 00:14:56,840 Speaker 1: how does state control over these groups actually work? In theory, 241 00:14:57,240 --> 00:15:02,680 Speaker 1: regulation operates around two channels. SASAK owns the holding companies, 242 00:15:02,880 --> 00:15:05,200 Speaker 1: which allows it, in theory, to make decisions that a 243 00:15:05,280 --> 00:15:08,000 Speaker 1: shareholder would be able to make it a private corporation. 244 00:15:08,880 --> 00:15:12,080 Speaker 1: There's also a parallel corpus structure directly run by the party, 245 00:15:12,480 --> 00:15:15,080 Speaker 1: and high ranking people in the corpus structure become party 246 00:15:15,080 --> 00:15:17,720 Speaker 1: members and are sent to cadre trainings at places like 247 00:15:17,720 --> 00:15:22,000 Speaker 1: the Central Party School in Beijing. Meanwhile, people swap between 248 00:15:22,040 --> 00:15:24,840 Speaker 1: SASSAK and high level manager positions, and the heads of 249 00:15:24,920 --> 00:15:28,840 Speaker 1: large sos also have positions in the Chinese government itself. 250 00:15:29,440 --> 00:15:31,560 Speaker 1: Trying to explain all of the positions they have and 251 00:15:31,600 --> 00:15:34,440 Speaker 1: the councils they're on and their technical ministerial ranks is 252 00:15:34,480 --> 00:15:37,440 Speaker 1: a disaster because oh boy, if you think the American 253 00:15:37,480 --> 00:15:40,120 Speaker 1: government is confusing, try sorting out who does what in 254 00:15:40,120 --> 00:15:43,080 Speaker 1: a party state. The moral of the story is that 255 00:15:43,120 --> 00:15:46,240 Speaker 1: the CCP tries to keep control over the enormous number 256 00:15:46,240 --> 00:15:49,040 Speaker 1: of companies it technically owns through control of who gets 257 00:15:49,040 --> 00:15:52,000 Speaker 1: appointed as the head of soees through Sassak, which is 258 00:15:52,000 --> 00:15:55,480 Speaker 1: directly a part of the state, and by integrating SOE 259 00:15:55,600 --> 00:15:59,800 Speaker 1: heads into various government and party bodies. They also are 260 00:16:00,440 --> 00:16:03,200 Speaker 1: somewhat embarrassingly given that they owed these companies forced to 261 00:16:03,240 --> 00:16:05,800 Speaker 1: directly go after them through the law and through the 262 00:16:05,840 --> 00:16:10,600 Speaker 1: court system, which works sometimes and also doesn't work other times. 263 00:16:11,600 --> 00:16:17,960 Speaker 1: But this relationship is multidirectional. Leewhen Lynn and Curtis J. Milhoft, 264 00:16:18,400 --> 00:16:22,640 Speaker 1: two scholars who've written extensively about Chinese corporate structure, argue 265 00:16:22,680 --> 00:16:25,800 Speaker 1: convincingly that the deep integration of the Party into soees 266 00:16:26,440 --> 00:16:29,880 Speaker 1: after the state owned industries have been corporatized, that is, 267 00:16:30,120 --> 00:16:34,280 Speaker 1: turned from direct state industries run by state employees to 268 00:16:34,480 --> 00:16:38,400 Speaker 1: profit seeking market corporations own a through shares, was a 269 00:16:38,440 --> 00:16:41,000 Speaker 1: way to buy the Party off and allow these firms 270 00:16:41,000 --> 00:16:43,680 Speaker 1: to become more capitalists in ways that wouldn't have worked 271 00:16:43,720 --> 00:16:46,840 Speaker 1: if the Party wasn't also getting rich off of it. 272 00:16:46,840 --> 00:16:49,560 Speaker 1: It's not just that China has state owned industries. It's 273 00:16:49,560 --> 00:16:52,600 Speaker 1: that the corporatization of state owned industries has made the 274 00:16:52,640 --> 00:16:57,680 Speaker 1: Party and the Chinese state increasingly capitalist, and this raises 275 00:16:57,680 --> 00:17:02,080 Speaker 1: another question. As the Chinese state grows more capitalists, are 276 00:17:02,120 --> 00:17:06,160 Speaker 1: public and private Chinese firms even all that different, Private 277 00:17:06,200 --> 00:17:08,879 Speaker 1: firms also have links to the state through equity, have 278 00:17:09,040 --> 00:17:12,760 Speaker 1: joint ventures with soees, where private companies will own a 279 00:17:12,760 --> 00:17:14,880 Speaker 1: part of a company and an SOE will own another 280 00:17:14,920 --> 00:17:18,600 Speaker 1: part of a company. Private companies expand and get access 281 00:17:18,640 --> 00:17:22,840 Speaker 1: to credit through partnering with local sos. In essence, many 282 00:17:22,840 --> 00:17:25,119 Speaker 1: of the things that are supposed to make sos different 283 00:17:25,119 --> 00:17:28,080 Speaker 1: from private companies are shared by both, from the profit 284 00:17:28,119 --> 00:17:33,959 Speaker 1: motive to state affiliation as milhop to put it quote, functionally, 285 00:17:34,400 --> 00:17:38,720 Speaker 1: SOEs and large pos private enterprises in China share many 286 00:17:38,720 --> 00:17:42,040 Speaker 1: similarities in the areas commonly thought to distinguish state owned 287 00:17:42,040 --> 00:17:46,160 Speaker 1: firms from privately owned firms. Market access received of state subsidies, 288 00:17:46,240 --> 00:17:50,159 Speaker 1: proximity state power, and execution of the government's policy objectives. 289 00:17:51,000 --> 00:17:53,520 Speaker 1: A complete account of Chinese state capitalists, and must explain 290 00:17:53,600 --> 00:17:59,080 Speaker 1: these similarities. Even figuring out what legally is an SOE 291 00:17:59,600 --> 00:18:03,200 Speaker 1: and what's technically still a private firm gets very weird, 292 00:18:03,359 --> 00:18:09,440 Speaker 1: very fast. ZT, for example, a giant Chinese telecom telecom 293 00:18:09,480 --> 00:18:12,639 Speaker 1: company is owned by a bewildering array of shell and 294 00:18:12,720 --> 00:18:15,520 Speaker 1: holding companies, which are in turn owned by other companies, 295 00:18:15,520 --> 00:18:18,680 Speaker 1: some of which are state owned. This is the level 296 00:18:18,720 --> 00:18:22,120 Speaker 1: of ownership confusion we're working at here. If the largest 297 00:18:22,160 --> 00:18:25,000 Speaker 1: stake of a company is owned by a holding company 298 00:18:25,200 --> 00:18:28,120 Speaker 1: that's owned in turn by a combination of two soees 299 00:18:28,160 --> 00:18:30,520 Speaker 1: who own fifty one percent of the stock and a 300 00:18:30,560 --> 00:18:33,520 Speaker 1: private investor's company who owns forty nine percent of the stock, 301 00:18:34,119 --> 00:18:37,840 Speaker 1: is the company state owned? And it gets worse Inzte's 302 00:18:37,960 --> 00:18:41,400 Speaker 1: case because even if you assume, okay, the majority stake 303 00:18:41,440 --> 00:18:43,800 Speaker 1: in this company is owned by an SOE, therefore it's 304 00:18:43,840 --> 00:18:46,560 Speaker 1: state owned, you would assume that the state or a 305 00:18:46,560 --> 00:18:51,680 Speaker 1: state owned company would manage the corporation. Right. Wrong. In 306 00:18:51,800 --> 00:18:54,560 Speaker 1: Zt's case, the soees worked out in agreement with the 307 00:18:54,600 --> 00:18:58,199 Speaker 1: other investor such that ZT is technically state owned but 308 00:18:58,280 --> 00:19:02,640 Speaker 1: privately managed. And this, it turns out, is a very 309 00:19:02,680 --> 00:19:06,640 Speaker 1: common arrangement because of laws about foreign ownership of companies 310 00:19:06,640 --> 00:19:09,399 Speaker 1: operating in China, many state owned enterprises that are actually 311 00:19:09,480 --> 00:19:13,680 Speaker 1: joint partnerships between sos and foreign corporations, where the SOE 312 00:19:13,920 --> 00:19:16,000 Speaker 1: owns fifty one percent of the stock and the foreign 313 00:19:16,040 --> 00:19:18,879 Speaker 1: corporation owns forty nine percent of the stock while running 314 00:19:18,920 --> 00:19:22,840 Speaker 1: the actual company in extracting profits from it even one 315 00:19:22,920 --> 00:19:27,160 Speaker 1: hundred percent. Chinese firms, of which there are many, pose 316 00:19:27,160 --> 00:19:30,080 Speaker 1: a challenge to the traditional conception of sos as run 317 00:19:30,080 --> 00:19:31,600 Speaker 1: by the state for the good of the state and 318 00:19:31,640 --> 00:19:35,440 Speaker 1: its political objectives. This goes back to their structure as 319 00:19:35,480 --> 00:19:40,560 Speaker 1: corporations the state owns by shareholding. This means, as I've emphasized, 320 00:19:40,720 --> 00:19:44,320 Speaker 1: that these sos aren't government ministries, their companies trying to 321 00:19:44,320 --> 00:19:46,680 Speaker 1: make a profit and are run by their own managers. 322 00:19:47,640 --> 00:19:50,600 Speaker 1: These firms have a total workforce of seventy million people, 323 00:19:50,600 --> 00:19:55,000 Speaker 1: which makes direct regulation very difficult in practice. This means 324 00:19:55,119 --> 00:19:57,680 Speaker 1: sos are a lot more autonomous in direct state control, 325 00:19:58,000 --> 00:20:01,359 Speaker 1: even with all the state guards put in place than 326 00:20:01,400 --> 00:20:05,199 Speaker 1: you'd think just from the word state owned industry. Another 327 00:20:05,200 --> 00:20:07,879 Speaker 1: thing that makes sooez more like private companies is that 328 00:20:07,960 --> 00:20:10,680 Speaker 1: money from soez goes back to the company and not 329 00:20:10,720 --> 00:20:13,359 Speaker 1: to the state, to which it pays dividends, but not 330 00:20:13,480 --> 00:20:16,720 Speaker 1: much else. This means that soees have their own revenue 331 00:20:16,720 --> 00:20:21,200 Speaker 1: stream that's not dependent on state budget allocations. Meanwhile, private 332 00:20:21,240 --> 00:20:26,200 Speaker 1: firms like SOEs are operated by members of symbolic party congresses, 333 00:20:26,640 --> 00:20:29,840 Speaker 1: and private firms also get state subsidies and access to 334 00:20:29,920 --> 00:20:34,120 Speaker 1: loans from state banks. A common canard about the unfairness 335 00:20:34,119 --> 00:20:37,119 Speaker 1: of anti competitive Chinese soez it applies to private firms 336 00:20:37,160 --> 00:20:40,040 Speaker 1: as well, And at this point I must point out 337 00:20:40,040 --> 00:20:43,280 Speaker 1: that any company anywhere in the world can make money 338 00:20:43,320 --> 00:20:46,280 Speaker 1: by allying with the state and getting access to state resources. 339 00:20:46,600 --> 00:20:49,320 Speaker 1: The US does this too, especially state and local governments, 340 00:20:49,359 --> 00:20:51,520 Speaker 1: who are all too happy to give enormous tax breaks 341 00:20:51,720 --> 00:20:55,960 Speaker 1: and even provide prison labor to private companies. Meanwhile, tech 342 00:20:55,960 --> 00:20:58,119 Speaker 1: companies like Amazon and Google are kept a float by 343 00:20:58,160 --> 00:21:01,360 Speaker 1: massive government contract to say nothing of the American defense industry. 344 00:21:01,960 --> 00:21:04,240 Speaker 1: In the US, we call this corruption, or at least 345 00:21:04,520 --> 00:21:07,200 Speaker 1: used to until it became legal to literally buy senators, 346 00:21:07,520 --> 00:21:09,760 Speaker 1: a thing that nat Sek Dipshits always seem to forget 347 00:21:09,760 --> 00:21:12,040 Speaker 1: when they talk about the uniqueness of the Chinese economy 348 00:21:12,040 --> 00:21:15,600 Speaker 1: and its relation to subsidies. There are obviously differences between 349 00:21:15,600 --> 00:21:18,399 Speaker 1: the US and Chinese economies, but arguing that businesses having 350 00:21:18,440 --> 00:21:22,080 Speaker 1: ties to the state which they extract benefits from constitutes 351 00:21:22,119 --> 00:21:26,239 Speaker 1: a unique form of capitalism as incomprehensibly absurd. None does 352 00:21:26,280 --> 00:21:29,320 Speaker 1: this have stopped China watchers from the most rabid reactionaries 353 00:21:29,320 --> 00:21:33,640 Speaker 1: and the most stalwart or self described style wart communists 354 00:21:33,680 --> 00:21:37,000 Speaker 1: to declare that China carries out something called industrial policy 355 00:21:37,040 --> 00:21:40,320 Speaker 1: through its soees, which makes it different from other neoliberal states. 356 00:21:41,200 --> 00:21:46,199 Speaker 1: So what is industrial policy? In theory, industrial policy refers 357 00:21:46,200 --> 00:21:49,280 Speaker 1: to the state giving subsidies and funding to specific corporations 358 00:21:49,280 --> 00:21:53,119 Speaker 1: in order to pursue specific economic objectives the market wouldn't 359 00:21:53,119 --> 00:21:58,119 Speaker 1: normally have pursued. These writers point the preferential treatment that 360 00:21:58,240 --> 00:22:01,760 Speaker 1: Chinese sos have credit and subsidies that they receive from 361 00:22:01,760 --> 00:22:04,480 Speaker 1: the government as evidence of the subordination of the market 362 00:22:04,520 --> 00:22:18,320 Speaker 1: to the political which they also claim is essentially a 363 00:22:18,359 --> 00:22:22,359 Speaker 1: form of socialist state planning. My response to this is 364 00:22:22,359 --> 00:22:24,800 Speaker 1: that I will accept that an see getting a subsidy 365 00:22:25,160 --> 00:22:28,199 Speaker 1: is socialist state planning. The moment they agree that the 366 00:22:28,280 --> 00:22:30,760 Speaker 1: US as a socialist state because of its coren subsidies 367 00:22:31,600 --> 00:22:35,119 Speaker 1: despite writing about China somehow turning everyone into anarchical capitalists. 368 00:22:35,480 --> 00:22:38,560 Speaker 1: State subsidies in the form of direct cash transfers, tax breaks, 369 00:22:38,600 --> 00:22:41,600 Speaker 1: preferential legal treatment, technology transfers, and a thousand other forms 370 00:22:41,600 --> 00:22:44,639 Speaker 1: of state aid are as old as capitalism itself and 371 00:22:44,680 --> 00:22:48,919 Speaker 1: are pretty normal even under neoliberalism. People describe these measures 372 00:22:48,920 --> 00:22:53,240 Speaker 1: as industrial policy, using state favor to promote certain industries, 373 00:22:53,600 --> 00:22:56,680 Speaker 1: but corn subsidies put lie to the claim that industrial 374 00:22:56,720 --> 00:22:59,760 Speaker 1: policy is some unique thing of a new era emerging 375 00:22:59,760 --> 00:23:04,240 Speaker 1: in capitalism that had totally disappeared with neoliberalism. American corn 376 00:23:04,240 --> 00:23:06,439 Speaker 1: and other agricultural subsidies are one of the largest and 377 00:23:06,480 --> 00:23:10,840 Speaker 1: most expensive industrial policy regimes in the world, constituting half 378 00:23:10,840 --> 00:23:14,199 Speaker 1: a trillion dollars spent since nineteen fifty five. They are 379 00:23:14,200 --> 00:23:16,720 Speaker 1: also written in as exceptions to most of the world's 380 00:23:16,720 --> 00:23:21,280 Speaker 1: major free trade agreements. We also need to ask what 381 00:23:21,480 --> 00:23:25,360 Speaker 1: is the difference between industrial policy, which is state strategic 382 00:23:25,400 --> 00:23:29,240 Speaker 1: investment in certain sectors to develop their economy, and regulatory capture, 383 00:23:29,600 --> 00:23:33,439 Speaker 1: where control over agencies or even the legislature itself is 384 00:23:33,600 --> 00:23:37,399 Speaker 1: taken over by specialistist groups. This question sounds silly, but 385 00:23:37,480 --> 00:23:40,080 Speaker 1: the results a company in a sector getting handed a 386 00:23:40,080 --> 00:23:42,680 Speaker 1: pile of money in various forms by the state looks 387 00:23:42,720 --> 00:23:47,840 Speaker 1: exactly the same. Those corn subsidies arguably are industrial policy. 388 00:23:47,880 --> 00:23:50,320 Speaker 1: They were technically originally designed to ensure that the US 389 00:23:50,359 --> 00:23:53,080 Speaker 1: would always have a supply of cheap food. But on 390 00:23:53,119 --> 00:23:55,440 Speaker 1: the other hand, the real reason they exist has nothing 391 00:23:55,440 --> 00:23:58,280 Speaker 1: to do with planning whatsoever. They exist because the copala 392 00:23:58,320 --> 00:24:00,880 Speaker 1: of legislatures from farming states have enough power to shut 393 00:24:00,920 --> 00:24:02,879 Speaker 1: down both the House and the Senate if their demands 394 00:24:02,880 --> 00:24:05,359 Speaker 1: aren't met. So every year the state bows to the 395 00:24:05,359 --> 00:24:09,639 Speaker 1: corn lobby and pays them billions of dollars. So is 396 00:24:09,680 --> 00:24:13,359 Speaker 1: this industrial policy or is it regulatory capture? And can 397 00:24:13,400 --> 00:24:17,320 Speaker 1: the two even be distinguished? In capitalist countries? This is 398 00:24:17,320 --> 00:24:19,359 Speaker 1: a question we need to take very seriously. In the 399 00:24:19,440 --> 00:24:22,679 Speaker 1: Chinese case, At the same time, we ask ourselves what 400 00:24:22,880 --> 00:24:26,239 Speaker 1: is the actual objective of the Chinese state? Is it 401 00:24:26,240 --> 00:24:29,920 Speaker 1: decoupling inmid trenchment from the West or is it making money? 402 00:24:30,080 --> 00:24:33,040 Speaker 1: There is significant evidence that it's the latter. For one thing, 403 00:24:33,359 --> 00:24:37,320 Speaker 1: China receives an enormous amount of foreign direct investment, something 404 00:24:37,359 --> 00:24:39,960 Speaker 1: that everyone seems to conveniently forgets, even though it was 405 00:24:40,000 --> 00:24:42,600 Speaker 1: one of the key elements that fueled Chinese industrialization and 406 00:24:42,640 --> 00:24:46,320 Speaker 1: plays a major role in the Chinese economy to this day. Meanwhile, 407 00:24:46,600 --> 00:24:49,920 Speaker 1: US affiliates in China alone had over half a trillion 408 00:24:49,960 --> 00:24:53,600 Speaker 1: dollars of sales just in twenty eighteen, while the focus 409 00:24:53,600 --> 00:24:56,760 Speaker 1: of most analysis has been in flashy disputes between the 410 00:24:56,840 --> 00:24:59,840 Speaker 1: US and China over their attempts to produce their own semiconductors. 411 00:25:00,400 --> 00:25:03,399 Speaker 1: China has also liberalized its foreign investment laws in the 412 00:25:03,480 --> 00:25:06,639 Speaker 1: last few years and allowed foreign companies and industries like 413 00:25:06,680 --> 00:25:10,040 Speaker 1: insurance to operate directly instead of running through joint partnerships 414 00:25:10,080 --> 00:25:14,119 Speaker 1: with Chinese stakeholders. Even the chairman of SASSAK gave a 415 00:25:14,119 --> 00:25:16,439 Speaker 1: speech in February about how his goal was to increase 416 00:25:16,480 --> 00:25:21,280 Speaker 1: the profitability of Chinese soees. China is and will remain 417 00:25:21,680 --> 00:25:25,520 Speaker 1: deeply enmeshed in the global capitalist economy, and this, I 418 00:25:25,560 --> 00:25:29,120 Speaker 1: think is as much as their unwillingness to grasp how 419 00:25:29,240 --> 00:25:33,520 Speaker 1: SOEs actually work. The fatal flaw of analysis of the 420 00:25:33,560 --> 00:25:37,520 Speaker 1: Chinese economy and its obsession with formal state ownership. These 421 00:25:37,560 --> 00:25:39,960 Speaker 1: analyzes are not a serious attempt to look at the 422 00:25:40,000 --> 00:25:44,280 Speaker 1: actual structure of the economic system the entire world, including China, 423 00:25:44,400 --> 00:25:47,760 Speaker 1: lives under. There are several kinds of arguments that we 424 00:25:47,800 --> 00:25:51,280 Speaker 1: need to look beyond formal ownership to understand capitalism. More broadly, 425 00:25:52,240 --> 00:25:55,520 Speaker 1: there is a somewhat complicated Marxist argument which holds that 426 00:25:55,800 --> 00:25:58,040 Speaker 1: while we talk about capitalism as a system where the 427 00:25:58,119 --> 00:26:00,639 Speaker 1: ruling class owns the means of production of the working class, 428 00:26:00,640 --> 00:26:03,480 Speaker 1: which owns nothing, is forced to work for them, that's 429 00:26:03,520 --> 00:26:07,359 Speaker 1: not all capitalism is. Capitalism is also a series of 430 00:26:07,359 --> 00:26:10,879 Speaker 1: commodity production, in which objects confront each other in the 431 00:26:10,920 --> 00:26:15,119 Speaker 1: market and appear as commodities with their own discrete values 432 00:26:15,200 --> 00:26:19,600 Speaker 1: based on abstract labor time. Generalize commodity production, which is 433 00:26:19,640 --> 00:26:23,000 Speaker 1: people producing commodities from market exchange and not for other purposes, 434 00:26:23,200 --> 00:26:26,360 Speaker 1: is the other core component of capitalism, and when you're 435 00:26:26,400 --> 00:26:30,000 Speaker 1: dealing with generalized commodity production, it doesn't really matter whether 436 00:26:30,080 --> 00:26:32,679 Speaker 1: the company that owns the holding company that owns the 437 00:26:32,720 --> 00:26:35,480 Speaker 1: company that makes the commodity is owned by the state 438 00:26:35,640 --> 00:26:38,119 Speaker 1: or a hedge fund or a bank or a softeign 439 00:26:38,200 --> 00:26:42,080 Speaker 1: wealth fund. It still reproduces commodity production, which means it's 440 00:26:42,080 --> 00:26:45,959 Speaker 1: still just capitalism, but with more complex formal ownership mechanisms. 441 00:26:47,160 --> 00:26:50,280 Speaker 1: There's also the David Graeber argument which goes, Okay, sure, 442 00:26:50,440 --> 00:26:53,760 Speaker 1: state owned property is technically the property of the people TM, 443 00:26:54,200 --> 00:26:56,320 Speaker 1: but try and to actually go there and see how 444 00:26:56,359 --> 00:26:59,760 Speaker 1: fast the cops show up and take you away. Just 445 00:26:59,760 --> 00:27:03,280 Speaker 1: like rivy ownership, you still don't own public property any 446 00:27:03,280 --> 00:27:06,480 Speaker 1: substantive sense. It's just controlled by a different group of 447 00:27:06,480 --> 00:27:09,359 Speaker 1: bureaucrats with guns. And focusing purely on ownership to define 448 00:27:09,359 --> 00:27:12,919 Speaker 1: an economic system gets you nowhere. And then there's my argument, 449 00:27:13,640 --> 00:27:16,439 Speaker 1: which is that people are absolutely obsessed with looking at 450 00:27:16,480 --> 00:27:19,359 Speaker 1: capitalism from the perspective of capital which means that they 451 00:27:19,359 --> 00:27:22,560 Speaker 1: are absolutely obsessed with the question of ownership. But what 452 00:27:22,720 --> 00:27:25,159 Speaker 1: happens if you look at so called state capitalism and 453 00:27:25,160 --> 00:27:27,359 Speaker 1: the nature of state ownership from the perspective of the 454 00:27:27,400 --> 00:27:32,800 Speaker 1: working class, everything suddenly becomes a lot clearer. Soe workers 455 00:27:32,840 --> 00:27:35,520 Speaker 1: are a bit better off than not us or we counterparts, 456 00:27:35,520 --> 00:27:38,600 Speaker 1: but their jobs suck ass, their hours are long, and 457 00:27:38,640 --> 00:27:41,560 Speaker 1: they don't make that much money. They are fully dependent 458 00:27:41,600 --> 00:27:44,600 Speaker 1: on selling their labor to the market to survive. And 459 00:27:44,680 --> 00:27:47,639 Speaker 1: all of these companies have hundreds of subsidiaries and suppliers 460 00:27:47,680 --> 00:27:50,879 Speaker 1: with a variety of levels of state ownership, and people 461 00:27:50,880 --> 00:27:54,480 Speaker 1: who work for those companies' lives are even shittier. Meanwhile, 462 00:27:54,560 --> 00:27:57,439 Speaker 1: the means of production and the physical infrastructure of so 463 00:27:57,520 --> 00:28:00,720 Speaker 1: called state capitalism was built by work who were left 464 00:28:00,720 --> 00:28:03,720 Speaker 1: with nothing but silicosis after turning places like Shenzhen from 465 00:28:03,760 --> 00:28:06,200 Speaker 1: fishing villages to a city with a population of over 466 00:28:06,240 --> 00:28:10,879 Speaker 1: ten million people in less than thirty years. This is 467 00:28:10,920 --> 00:28:14,080 Speaker 1: the ultimate truth of the Chinese economy, just says, it 468 00:28:14,119 --> 00:28:17,960 Speaker 1: is the ultimate truth of the American economy. We sell 469 00:28:18,000 --> 00:28:20,919 Speaker 1: our lives for nothing, and our only reward in the 470 00:28:21,080 --> 00:28:23,520 Speaker 1: end is to die amidst the wonders of the world 471 00:28:23,920 --> 00:28:30,840 Speaker 1: that was never ours. It could Happen here as a 472 00:28:30,880 --> 00:28:33,720 Speaker 1: production of cool Zone Media. For more podcasts from cool 473 00:28:33,800 --> 00:28:36,639 Speaker 1: Zone Media, visit our website cool zonemedia dot com or 474 00:28:36,720 --> 00:28:39,360 Speaker 1: check us out on the iHeartRadio app, Apple Podcasts, or 475 00:28:39,400 --> 00:28:42,400 Speaker 1: wherever you listen to podcasts. You can find sources for 476 00:28:42,440 --> 00:28:45,480 Speaker 1: It could Happen Here, updated monthly at cool zonemedia dot 477 00:28:45,520 --> 00:28:47,720 Speaker 1: com slash sources. Thanks for listening.