The Contradictions of China’s Communist Capitalism..

Prof Pranab Bardhan has a piece on the contradiction:

The recent dizzying plunge in the Shanghai and Shenzhen stock exchanges has posed a unique test for China’s Communist rulers. So long as the markets were rising, the paradox of vigorous capitalist development overseen by the world’s largest and strongest Communist party confounded only academics and old-school Marxists. As the Chinese Communist Party elite and their relatives, foreign financial institutions, and some Chinese small investors (enabled by margin lending) made money on stocks, no one bothered to comprehend the mutant creature they were milking.

But now, as the realization sinks in that Chinese stock prices will not keep rising indefinitely, the CCP is taking desperate, if clumsy, measures to control the correction. All new initial public offerings have been halted, and much trading has been curtailed; the central bank has been asked to help the China Securities Finance Corporation induce investors to buy shares and thus stabilize the market. Indeed, even the country’s sovereign wealth fund has gotten into the act.

But, unlike in other capitalist economies, money is not the only tool at the authorities’ disposal. If your brokers in China advise you to sell shares, they must be careful not to appear to be rumormongers, subject to official punishment. And there are reports that sales of large holdings may trigger investigations by the authorities. Causing public disorder or financial instability can be a serious offense in China, where conspiracy theories about foreigners’ efforts to undermine the economy abound.

What Chinese officials desire is a capitalist stock market without the possibility of large losses that can shake confidence in the CCP’s credibility and control. But that is a market that no one has yet invented.

The spectacle of a communist regime trying to jack up a casino-like capitalist market is just one of the many contradictions that have been accumulating in almost every corner of China’s economy and politics. And now, their weight is perhaps becoming too heavy for the Party hierarchy to bear.

Indeed, the composition of the CCP is itself a contradiction. The revolutionary party of peasants and workers is now dominated by businessmen, college students, and professionals. One-third of the people listed in the Hurun Report, the Shanghai-based monitor of China’s wealthiest people, are Party members. The average wealth of the richest 70 members of the National People’s Congress, China’s parliament, far exceeds $1 billion. (The richest 70 members of India’s parliament or even the US Congress, both now controlled by right-wing political parties, are substantially less wealthy.)

Hmm.

Mao himself had this quote on contradictions:

Mao famously speculated on the nature of contradictions in a 1937 essay: “The law of contradiction in things, that is, the law of the unity of opposites, is the fundamental law of nature and of society.” One wonders, though, if even he could have grasped, much less managed, the contradictions of communist capitalism.

There were times when communist/socialist party leaders themselves stood for the values espoused by the party. Now, it is all over the place..

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