Speaker 1: Welcome, Dick. It happened here. I'm your host, Na Wong,
Speaker 1: and today we're going to be talking about something a
Speaker 1: little bit different. In the last half decade, a growing
Speaker 1: political focus on China has transformed a cottage industry of
Speaker 1: American China watchers into a sprawling metropolis of pseudoanalysis, a
Speaker 1: veritable machine that turns out racialized fear of the Chinese
Speaker 1: other and transforms it into economic papers that close with
Speaker 1: quote unquote policy solutions about the so called China problem.
Speaker 1: In these circles, a consensus is emerging about what they
Speaker 1: call Chinese state capitalism and its supposed risk of the
Speaker 1: United States. China's economy, they argue, is not a free
Speaker 1: market economy like that of the United States. Instead, China's
Speaker 1: large array of state owned industries and its willingness to
Speaker 1: use investments to incentivize specific kinds of research while protecting
Speaker 1: companies from pure market competition means that the state, and
Speaker 1: not the market, dictates the course of the Chinese economy.
Speaker 1: Under these assumptions, the Chinese economy poses two major threats
Speaker 1: to American companies in the American security state. First, state
Speaker 1: owned industry is subsidized by the state will inevitably outcompete
Speaker 1: American companies because American companies can't match the sheer quantity
Speaker 1: of capital held by the Chinese state, which violates the
Speaker 1: fairness and competitiveness of the free market by making companies
Speaker 1: compete on unequal grounds. Second, the close ties between the
Speaker 1: Chinese government and state owned industries and even private Chinese
Speaker 1: companies means that their technology will be used by the
Speaker 1: CCP to strengthen its military by stealing American technology. The
Speaker 1: problem with this consensus at a fundamental level is that
Speaker 1: it's utterly uninterested in how Chinese state owned enterprises known
Speaker 1: as soees actually functioned. And this is a real problem
Speaker 1: because Chinese sos are not what you or the people
Speaker 1: righting American forum policy think they are. So today we're
Speaker 1: going to take a dive into the belly of the
Speaker 1: state and figure out how soos actually function and determine
Speaker 1: what this actually does to the prevailing theories about how
Speaker 1: Chinese economy works and what it means for both the
Speaker 1: American and Chinese working classes. But before we get into
Speaker 1: the structure of the SOE, we need to talk about
Speaker 1: state capitalism. State capitalism is an old term. Most of
Speaker 1: the people writing about it will trace it back to
Speaker 1: Lenin's New Economic Policy, a massive shift towards the market
Speaker 1: in the Soviet economy of the early twenties. The New
Speaker 1: Economic Policy relegalized private capitalist firms, albeit in a much
Speaker 1: reduced capacity, with a very large state sector driving the
Speaker 1: economy as a whole, a condition Lenin dubbed state capitalism.
Speaker 1: But even using state capitalism to describe both the New
Speaker 1: Economic Plan and the current situation in China reveals a
Speaker 1: profound misunderstanding of both Lenin's NEP and the modern Chinese economy.
Speaker 1: For one thing, during the NEP, state owned industries accounted
Speaker 1: for at least seventy percent of Soviet industrial output, increasing
Speaker 1: to seventy seven percent by the end of the policy. Meanwhile,
Speaker 1: despite the height behind Chinese state capitalism, china state sector
Speaker 1: represents a measly forty percent of China's economy, uniquely high
Speaker 1: for a capitalist economy, but quite literally the inverse of
Speaker 1: the relationship between capitalist frames and the state. In the
Speaker 1: USSR that sixty percent of China's GDP is private and
Speaker 1: only forty percent is generated by the state. And don't
Speaker 1: look too closely at that forty percent, because only thirty
Speaker 1: percent of it is from actual state industries, the other
Speaker 1: ten percent resulting from the regular function of the state itself.
Speaker 1: Shows what actually drives the Chinese economy, not the state
Speaker 1: at all, but the market. This is very important because
Speaker 1: the story of the Chinese economy in the last forty
Speaker 1: years is not simply the story of a state run
Speaker 1: command economy transforming into a market economy. It is also
Speaker 1: and arguably primarily, the story of the market consuming the
Speaker 1: state from the inside out. This becomes more clear the
Speaker 1: closer you look at how state owned enterprises are actually structured,
Speaker 1: and it is here the weakness of the very term
Speaker 1: state owned enterprise comes into focus. Academics and journalists write
Speaker 1: about state owned enterprises as if the word means one
Speaker 1: specific thing, but the reality is that there are an
Speaker 1: enormous number of different kinds of sos, with different structures
Speaker 1: and different relationships to the state. When regular people think
Speaker 1: about state ownership, it tends to invoke the specter of
Speaker 1: the USSR in a Soviet style sooe, and will take
Speaker 1: as an example of Chinese SOE the Socialist period, which
Speaker 1: functions similarly. The firm is literally a government department. For example,
Speaker 1: in nineteen seventy nine, China established the Bureau of nonferest
Speaker 1: Metals and this is the best name you're going to
Speaker 1: get out of the CCP. In this entire episode, that
Speaker 1: bureau was in charge of running a luninium production. The
Speaker 1: government ministry simply ran the mines and the refineries and
Speaker 1: the factories directly, and everyone working in the factory was
Speaker 1: a direct government employee paid by the state. This is
Speaker 1: also pretty close to how the American Post Office is structured.
Speaker 1: But Soviet SOEs crucially were not firms that competed for
Speaker 1: money in the market. They worked towards a production plan
Speaker 1: and were assigned resources based on their output. In this way,
Speaker 1: they're closer to a municipal water service than most modern SOEs.
Speaker 1: Their job, in theory was to make a thing or
Speaker 1: a service, not make money. Modern Chinese soees, despite sharing
Speaker 1: the same name as or socialist period predecessors, are very different.
Speaker 1: For one thing, Modern Chinese SOEs, as well as a
Speaker 1: lot of other state owned companies like the Saudi government's
Speaker 1: oil companies Saudi a Ramco, are not directly part of
Speaker 1: the government at all. Instead, they're structured as regular corporations
Speaker 1: whose stock happens to be owned by the governments. This
Speaker 1: shareholding relationship is one of the most common kinds of
Speaker 1: modern SOEs, but as we'll see, they make ownership and
Speaker 1: management structures increasingly complex. The other major difference from Soviet
Speaker 1: firms is that companies like Saudi a Ramco and modern
Speaker 1: Chinese soez are for profit companies. I don't exist to
Speaker 1: provide a service, they exist to make money. This gets
Speaker 1: very weird very quickly. For one thing, while we tend
Speaker 1: to think of state owned enterprises as belonging to the
Speaker 1: national governments, municipal, provincial, and even disher Can county governments
Speaker 1: in China have their own SOEs. On a conceptual level,
Speaker 1: this makes sense. China's economy is the size of a continents,
Speaker 1: and individual provinces have the geographic size, population, natural resources,
Speaker 1: and economy of entire nations, which means that provincial soees
Speaker 1: can rival national firms. But this also means that state
Speaker 1: owned industries from different levels of government are directly competing
Speaker 1: with each other on the market. This is something beyond
Speaker 1: the experience of previous theorists of the state and capitalism.
Speaker 1: Frederick Engels, the close friend of Karl Marx, was able
Speaker 1: to predict the rise of capitalist state owned industries writing quote.
Speaker 1: At a further stage of evolution, this form also becomes insufficient.
Speaker 1: The official representative of the capitalist state will ultimately have
Speaker 1: to undertake the direction of production. This necessity for conversion
Speaker 1: into state property is felt first in the great institutions
Speaker 1: for intercourse and communication, the post office, the telegrams, the railways.
Speaker 1: If the crisis demonstrates the incapacity of the bourgeoisie for
Speaker 1: managing any longer modern productive forces, the transformation of the
Speaker 1: great establishment for production and distribution into joint stock companies
Speaker 1: and state property shows how unnecessary the bourgeoisie are for
Speaker 1: that purpose. All the social functions of the capitalists are
Speaker 1: now performed by salaried employees. The capitalist has no social
Speaker 1: function than that of pocketing dividends, tearing off coupons, and
Speaker 1: gambling at the stock exchange, with the different capitalists to
Speaker 1: spoil one another of their capital. At first, the capitalist
Speaker 1: mode of production forces out the workers. Now it forces
Speaker 1: out the capitalists and reduces them, just as it reduced
Speaker 1: the workers to the ranks of the surfplus population, although
Speaker 1: not immediately into those of the industrial reserve army, but
Speaker 1: angles imagined the state as a collective capitalist, replacing the
Speaker 1: individual capitalist. What no one could have foreseen was capitalists
Speaker 1: break was capitalism breaking the collective nature of the state,
Speaker 1: entirely hollowing it out until its chunks competed with each
Speaker 1: other on the market. This is the state of modern
Speaker 1: Chinese SOEs. These SOEs are capitalists, firms subject to market discipline.
Speaker 1: They can and will fail and go under if they
Speaker 1: aren't making enough money, and the government can and will
Speaker 1: tear them apart and force the still state owned pieces
Speaker 1: to compete against each other. These state owned industries also
Speaker 1: largely are not supposed to be monopolies. Firms they get
Speaker 1: too large and powerful can and will be broken up
Speaker 1: and the parts once again set to compete against each other.
Speaker 1: Weirder still, these SOEs are also listed on the stock markets,
Speaker 1: meaning individual capitalists, and as we'll see later, even foreign
Speaker 1: firms can buy forty nine percent stakes and nominally state
Speaker 1: owned industries. Now, if the state doing market competition against
Speaker 1: itself wasn't weird enough for you, let me introduce another complication.
Speaker 1: The State Owned Asset Supervision and Administration Commission of the
Speaker 1: State Council and no the state owned Asset Supervision and Administration.
Speaker 1: Commission of the State Council is not a name that
Speaker 1: sounds any better in Chinese. If you have a bureaucracy
Speaker 1: rooted in Leninism, the product is a veritable corricopia of
Speaker 1: the most absolutely dogshit name you've ever heard in your
Speaker 1: entire life. This commission is better known for obvious reasons
Speaker 1: as Sassak, and it is the government body that owns
Speaker 1: the shares of most of the largest firms in China,
Speaker 1: which are known as the national champions. Now you could
Speaker 1: be forgiven for thinking you now understand the structure of
Speaker 1: Chinese soez. Sasak, which is a part of the state,
Speaker 1: owns the SOEs. Bob's your uncle, Everyone goes home for
Speaker 1: the night, and the episode ends right here. Unfortunately, it
Speaker 1: is way more convoluted than that. When I said SASAQ
Speaker 1: owns the shares of the largest firms in China, that's
Speaker 1: only true in a technical sense. What Sasak actually owns
Speaker 1: are the shares of massive holding companies, companies that exist
Speaker 1: on paper but whose existence is purely dedicated to owning
Speaker 1: the shares of other companies. These holding companies own the
Speaker 1: shares of the publicly traded companies. You might have heard of,
Speaker 1: like Sinopek China state owned oil companies. And this is
Speaker 1: where the simplistic narrative of the Chinese soe, a single
Speaker 1: firm owned by the state under its direct political control,
Speaker 1: completely falls apart, because again, the state doesn't really own
Speaker 1: these firms directly. What they own is a holding company
Speaker 1: that owns the stock of the sues. That holding company, however,
Speaker 1: is the actual basis of the organization of Chinese state ownership.
Speaker 1: The building blocks of the Chinese state economy aren't single
Speaker 1: state owned enterprises at all. The economy is actually composed
Speaker 1: of what are called business groups. American listeners may not
Speaker 1: be very familiar with business groups, but there are a
Speaker 1: common sight in what became known as the Tiger economies,
Speaker 1: a series of economies that's all rabid industrial development in
Speaker 1: the post World War two era, largely fueled by the
Speaker 1: demands of American military supply lines for its wars in
Speaker 1: Korea and Vietnam. The two most infamous are the Japanese Keretsu,
Speaker 1: the successor to the old Japanese zaibatsu that dominated the
Speaker 1: pre war Japanese economy and which were to some extent
Speaker 1: broken up after the war, and Korean chabel conglomerates. These
Speaker 1: massive groups of businesses are either owned by the same
Speaker 1: people or families in the case of the chabel, or
Speaker 1: linked by mutual shareholding of each other's companies. Like kedatsu,
Speaker 1: the groups cooperate and coordinate the business strategy instead of
Speaker 1: competing against each other, which allows them to carry out
Speaker 1: a level of long term planning that's sometimes difficult for
Speaker 1: individual for profit companies. Chinese economists sent to Japan to
Speaker 1: study kedatsu in the seventies and eighties returned with policy
Speaker 1: in hands, But the business groups that eventually emerged in
Speaker 1: the Chinese economy after an extended process of trial and
Speaker 1: error are different than their Korean or Japanese counterparts. Where
Speaker 1: chabel are organized around families and Kedatsu are organized around
Speaker 1: a commercial bank that provides financing for the companies and
Speaker 1: the group, Chinese businesses are organized by those holding companies
Speaker 1: one hundred percent owned by Sassak and therefore the Chinese State.
Speaker 1: Those holding companies, also sometimes called core companies, own the
Speaker 1: majority of the stock of a variety of public betraded companies.
Speaker 1: They also own a finance company which finances the companies
Speaker 1: and work with research institutes which carry out scientific and
Speaker 1: research development for the entire group. These research institutes, which
Speaker 1: are often university affiliated, are technically nonprofit, but take money
Speaker 1: from the core companies in exchange for the research development
Speaker 1: they do. Chinese business groups are often massive, organizing hundreds
Speaker 1: of companies who also maintain trade and supply relations with
Speaker 1: hundreds more companies technically outside the group. These groups are
Speaker 1: organized by what's called articles of grouping, which the core
Speaker 1: holding company who owns the stock, and the rest of
Speaker 1: the companies get those companies to sign. These articles form
Speaker 1: a top down structure for the entire group that also
Speaker 1: includes council and management bodies for the entire group, with
Speaker 1: representatives from each of the companies in the group. This structure,
Speaker 1: in theory, is how the CCP transmits policy down from
Speaker 1: single holding companies to all of their downstream subsidiaries and allies.
Speaker 1: And this is important because, at least in theory, business
Speaker 1: groups are supposed to carry out government and dose and
Speaker 1: economic developments, but in the real world this is a
Speaker 1: significant challenge because again, even individual business groups comprise hundreds
Speaker 1: of companies, and the states grasp on them as often tenuous,
Speaker 1: as seen by a wave of state owned companies that
Speaker 1: theoretically are supposed to make things getting into real estate
Speaker 1: speculation a problem the CCP has been attempting to deal
Speaker 1: with since two thousand and eight and only really has
Speaker 1: gotten under control in the last two years. But you
Speaker 1: know who will not do housing speculation instead of making
Speaker 1: ads for you. It is the companies and the products
Speaker 1: and services that support this podcast. And we're back so
Speaker 1: confronted with the enormity of the scale of Chinese business groups,
Speaker 1: how does state control over these groups actually work? In theory,
Speaker 1: regulation operates around two channels. SASAK owns the holding companies,
Speaker 1: which allows it, in theory, to make decisions that a
Speaker 1: shareholder would be able to make it a private corporation.
Speaker 1: There's also a parallel corpus structure directly run by the party,
Speaker 1: and high ranking people in the corpus structure become party
Speaker 1: members and are sent to cadre trainings at places like
Speaker 1: the Central Party School in Beijing. Meanwhile, people swap between
Speaker 1: SASSAK and high level manager positions, and the heads of
Speaker 1: large sos also have positions in the Chinese government itself.
Speaker 1: Trying to explain all of the positions they have and
Speaker 1: the councils they're on and their technical ministerial ranks is
Speaker 1: a disaster because oh boy, if you think the American
Speaker 1: government is confusing, try sorting out who does what in
Speaker 1: a party state. The moral of the story is that
Speaker 1: the CCP tries to keep control over the enormous number
Speaker 1: of companies it technically owns through control of who gets
Speaker 1: appointed as the head of soees through Sassak, which is
Speaker 1: directly a part of the state, and by integrating SOE
Speaker 1: heads into various government and party bodies. They also are
Speaker 1: somewhat embarrassingly given that they owed these companies forced to
Speaker 1: directly go after them through the law and through the
Speaker 1: court system, which works sometimes and also doesn't work other times.
Speaker 1: But this relationship is multidirectional. Leewhen Lynn and Curtis J. Milhoft,
Speaker 1: two scholars who've written extensively about Chinese corporate structure, argue
Speaker 1: convincingly that the deep integration of the Party into soees
Speaker 1: after the state owned industries have been corporatized, that is,
Speaker 1: turned from direct state industries run by state employees to
Speaker 1: profit seeking market corporations own a through shares, was a
Speaker 1: way to buy the Party off and allow these firms
Speaker 1: to become more capitalists in ways that wouldn't have worked
Speaker 1: if the Party wasn't also getting rich off of it.
Speaker 1: It's not just that China has state owned industries. It's
Speaker 1: that the corporatization of state owned industries has made the
Speaker 1: Party and the Chinese state increasingly capitalist, and this raises
Speaker 1: another question. As the Chinese state grows more capitalists, are
Speaker 1: public and private Chinese firms even all that different, Private
Speaker 1: firms also have links to the state through equity, have
Speaker 1: joint ventures with soees, where private companies will own a
Speaker 1: part of a company and an SOE will own another
Speaker 1: part of a company. Private companies expand and get access
Speaker 1: to credit through partnering with local sos. In essence, many
Speaker 1: of the things that are supposed to make sos different
Speaker 1: from private companies are shared by both, from the profit
Speaker 1: motive to state affiliation as milhop to put it quote, functionally,
Speaker 1: SOEs and large pos private enterprises in China share many
Speaker 1: similarities in the areas commonly thought to distinguish state owned
Speaker 1: firms from privately owned firms. Market access received of state subsidies,
Speaker 1: proximity state power, and execution of the government's policy objectives.
Speaker 1: A complete account of Chinese state capitalists, and must explain
Speaker 1: these similarities. Even figuring out what legally is an SOE
Speaker 1: and what's technically still a private firm gets very weird,
Speaker 1: very fast. ZT, for example, a giant Chinese telecom telecom
Speaker 1: company is owned by a bewildering array of shell and
Speaker 1: holding companies, which are in turn owned by other companies,
Speaker 1: some of which are state owned. This is the level
Speaker 1: of ownership confusion we're working at here. If the largest
Speaker 1: stake of a company is owned by a holding company
Speaker 1: that's owned in turn by a combination of two soees
Speaker 1: who own fifty one percent of the stock and a
Speaker 1: private investor's company who owns forty nine percent of the stock,
Speaker 1: is the company state owned? And it gets worse Inzte's
Speaker 1: case because even if you assume, okay, the majority stake
Speaker 1: in this company is owned by an SOE, therefore it's
Speaker 1: state owned, you would assume that the state or a
Speaker 1: state owned company would manage the corporation. Right. Wrong. In
Speaker 1: Zt's case, the soees worked out in agreement with the
Speaker 1: other investor such that ZT is technically state owned but
Speaker 1: privately managed. And this, it turns out, is a very
Speaker 1: common arrangement because of laws about foreign ownership of companies
Speaker 1: operating in China, many state owned enterprises that are actually
Speaker 1: joint partnerships between sos and foreign corporations, where the SOE
Speaker 1: owns fifty one percent of the stock and the foreign
Speaker 1: corporation owns forty nine percent of the stock while running
Speaker 1: the actual company in extracting profits from it even one
Speaker 1: hundred percent. Chinese firms, of which there are many, pose
Speaker 1: a challenge to the traditional conception of sos as run
Speaker 1: by the state for the good of the state and
Speaker 1: its political objectives. This goes back to their structure as
Speaker 1: corporations the state owns by shareholding. This means, as I've emphasized,
Speaker 1: that these sos aren't government ministries, their companies trying to
Speaker 1: make a profit and are run by their own managers.
Speaker 1: These firms have a total workforce of seventy million people,
Speaker 1: which makes direct regulation very difficult in practice. This means
Speaker 1: sos are a lot more autonomous in direct state control,
Speaker 1: even with all the state guards put in place than
Speaker 1: you'd think just from the word state owned industry. Another
Speaker 1: thing that makes sooez more like private companies is that
Speaker 1: money from soez goes back to the company and not
Speaker 1: to the state, to which it pays dividends, but not
Speaker 1: much else. This means that soees have their own revenue
Speaker 1: stream that's not dependent on state budget allocations. Meanwhile, private
Speaker 1: firms like SOEs are operated by members of symbolic party congresses,
Speaker 1: and private firms also get state subsidies and access to
Speaker 1: loans from state banks. A common canard about the unfairness
Speaker 1: of anti competitive Chinese soez it applies to private firms
Speaker 1: as well, And at this point I must point out
Speaker 1: that any company anywhere in the world can make money
Speaker 1: by allying with the state and getting access to state resources.
Speaker 1: The US does this too, especially state and local governments,
Speaker 1: who are all too happy to give enormous tax breaks
Speaker 1: and even provide prison labor to private companies. Meanwhile, tech
Speaker 1: companies like Amazon and Google are kept a float by
Speaker 1: massive government contract to say nothing of the American defense industry.
Speaker 1: In the US, we call this corruption, or at least
Speaker 1: used to until it became legal to literally buy senators,
Speaker 1: a thing that nat Sek Dipshits always seem to forget
Speaker 1: when they talk about the uniqueness of the Chinese economy
Speaker 1: and its relation to subsidies. There are obviously differences between
Speaker 1: the US and Chinese economies, but arguing that businesses having
Speaker 1: ties to the state which they extract benefits from constitutes
Speaker 1: a unique form of capitalism as incomprehensibly absurd. None does
Speaker 1: this have stopped China watchers from the most rabid reactionaries
Speaker 1: and the most stalwart or self described style wart communists
Speaker 1: to declare that China carries out something called industrial policy
Speaker 1: through its soees, which makes it different from other neoliberal states.
Speaker 1: So what is industrial policy? In theory, industrial policy refers
Speaker 1: to the state giving subsidies and funding to specific corporations
Speaker 1: in order to pursue specific economic objectives the market wouldn't
Speaker 1: normally have pursued. These writers point the preferential treatment that
Speaker 1: Chinese sos have credit and subsidies that they receive from
Speaker 1: the government as evidence of the subordination of the market
Speaker 1: to the political which they also claim is essentially a
Speaker 1: form of socialist state planning. My response to this is
Speaker 1: that I will accept that an see getting a subsidy
Speaker 1: is socialist state planning. The moment they agree that the
Speaker 1: US as a socialist state because of its coren subsidies
Speaker 1: despite writing about China somehow turning everyone into anarchical capitalists.
Speaker 1: State subsidies in the form of direct cash transfers, tax breaks,
Speaker 1: preferential legal treatment, technology transfers, and a thousand other forms
Speaker 1: of state aid are as old as capitalism itself and
Speaker 1: are pretty normal even under neoliberalism. People describe these measures
Speaker 1: as industrial policy, using state favor to promote certain industries,
Speaker 1: but corn subsidies put lie to the claim that industrial
Speaker 1: policy is some unique thing of a new era emerging
Speaker 1: in capitalism that had totally disappeared with neoliberalism. American corn
Speaker 1: and other agricultural subsidies are one of the largest and
Speaker 1: most expensive industrial policy regimes in the world, constituting half
Speaker 1: a trillion dollars spent since nineteen fifty five. They are
Speaker 1: also written in as exceptions to most of the world's
Speaker 1: major free trade agreements. We also need to ask what
Speaker 1: is the difference between industrial policy, which is state strategic
Speaker 1: investment in certain sectors to develop their economy, and regulatory capture,
Speaker 1: where control over agencies or even the legislature itself is
Speaker 1: taken over by specialistist groups. This question sounds silly, but
Speaker 1: the results a company in a sector getting handed a
Speaker 1: pile of money in various forms by the state looks
Speaker 1: exactly the same. Those corn subsidies arguably are industrial policy.
Speaker 1: They were technically originally designed to ensure that the US
Speaker 1: would always have a supply of cheap food. But on
Speaker 1: the other hand, the real reason they exist has nothing
Speaker 1: to do with planning whatsoever. They exist because the copala
Speaker 1: of legislatures from farming states have enough power to shut
Speaker 1: down both the House and the Senate if their demands
Speaker 1: aren't met. So every year the state bows to the
Speaker 1: corn lobby and pays them billions of dollars. So is
Speaker 1: this industrial policy or is it regulatory capture? And can
Speaker 1: the two even be distinguished? In capitalist countries? This is
Speaker 1: a question we need to take very seriously. In the
Speaker 1: Chinese case, At the same time, we ask ourselves what
Speaker 1: is the actual objective of the Chinese state? Is it
Speaker 1: decoupling inmid trenchment from the West or is it making money?
Speaker 1: There is significant evidence that it's the latter. For one thing,
Speaker 1: China receives an enormous amount of foreign direct investment, something
Speaker 1: that everyone seems to conveniently forgets, even though it was
Speaker 1: one of the key elements that fueled Chinese industrialization and
Speaker 1: plays a major role in the Chinese economy to this day. Meanwhile,
Speaker 1: US affiliates in China alone had over half a trillion
Speaker 1: dollars of sales just in twenty eighteen, while the focus
Speaker 1: of most analysis has been in flashy disputes between the
Speaker 1: US and China over their attempts to produce their own semiconductors.
Speaker 1: China has also liberalized its foreign investment laws in the
Speaker 1: last few years and allowed foreign companies and industries like
Speaker 1: insurance to operate directly instead of running through joint partnerships
Speaker 1: with Chinese stakeholders. Even the chairman of SASSAK gave a
Speaker 1: speech in February about how his goal was to increase
Speaker 1: the profitability of Chinese soees. China is and will remain
Speaker 1: deeply enmeshed in the global capitalist economy, and this, I
Speaker 1: think is as much as their unwillingness to grasp how
Speaker 1: SOEs actually work. The fatal flaw of analysis of the
Speaker 1: Chinese economy and its obsession with formal state ownership. These
Speaker 1: analyzes are not a serious attempt to look at the
Speaker 1: actual structure of the economic system the entire world, including China,
Speaker 1: lives under. There are several kinds of arguments that we
Speaker 1: need to look beyond formal ownership to understand capitalism. More broadly,
Speaker 1: there is a somewhat complicated Marxist argument which holds that
Speaker 1: while we talk about capitalism as a system where the
Speaker 1: ruling class owns the means of production of the working class,
Speaker 1: which owns nothing, is forced to work for them, that's
Speaker 1: not all capitalism is. Capitalism is also a series of
Speaker 1: commodity production, in which objects confront each other in the
Speaker 1: market and appear as commodities with their own discrete values
Speaker 1: based on abstract labor time. Generalize commodity production, which is
Speaker 1: people producing commodities from market exchange and not for other purposes,
Speaker 1: is the other core component of capitalism, and when you're
Speaker 1: dealing with generalized commodity production, it doesn't really matter whether
Speaker 1: the company that owns the holding company that owns the
Speaker 1: company that makes the commodity is owned by the state
Speaker 1: or a hedge fund or a bank or a softeign
Speaker 1: wealth fund. It still reproduces commodity production, which means it's
Speaker 1: still just capitalism, but with more complex formal ownership mechanisms.
Speaker 1: There's also the David Graeber argument which goes, Okay, sure,
Speaker 1: state owned property is technically the property of the people TM,
Speaker 1: but try and to actually go there and see how
Speaker 1: fast the cops show up and take you away. Just
Speaker 1: like rivy ownership, you still don't own public property any
Speaker 1: substantive sense. It's just controlled by a different group of
Speaker 1: bureaucrats with guns. And focusing purely on ownership to define
Speaker 1: an economic system gets you nowhere. And then there's my argument,
Speaker 1: which is that people are absolutely obsessed with looking at
Speaker 1: capitalism from the perspective of capital which means that they
Speaker 1: are absolutely obsessed with the question of ownership. But what
Speaker 1: happens if you look at so called state capitalism and
Speaker 1: the nature of state ownership from the perspective of the
Speaker 1: working class, everything suddenly becomes a lot clearer. Soe workers
Speaker 1: are a bit better off than not us or we counterparts,
Speaker 1: but their jobs suck ass, their hours are long, and
Speaker 1: they don't make that much money. They are fully dependent
Speaker 1: on selling their labor to the market to survive. And
Speaker 1: all of these companies have hundreds of subsidiaries and suppliers
Speaker 1: with a variety of levels of state ownership, and people
Speaker 1: who work for those companies' lives are even shittier. Meanwhile,
Speaker 1: the means of production and the physical infrastructure of so
Speaker 1: called state capitalism was built by work who were left
Speaker 1: with nothing but silicosis after turning places like Shenzhen from
Speaker 1: fishing villages to a city with a population of over
Speaker 1: ten million people in less than thirty years. This is
Speaker 1: the ultimate truth of the Chinese economy, just says, it
Speaker 1: is the ultimate truth of the American economy. We sell
Speaker 1: our lives for nothing, and our only reward in the
Speaker 1: end is to die amidst the wonders of the world
Speaker 1: that was never ours. It could Happen here as a
Speaker 1: production of cool Zone Media. For more podcasts from cool
Speaker 1: Zone Media, visit our website cool zonemedia dot com or
Speaker 1: check us out on the iHeartRadio app, Apple Podcasts, or
Speaker 1: wherever you listen to podcasts. You can find sources for
Speaker 1: It could Happen Here, updated monthly at cool zonemedia dot
Speaker 1: com slash sources. Thanks for listening.