The final result of the development of social economy

Chris Burford cburford at gn.apc.org
Tue Jul 21 00:27:56 PDT 1998


Dear Mr He,

E-mail correspondence from the People's Republic of China is a valuable connection, and the first I have seen on mailing lists such as these. But first as far as I am concerned there are a number of communication difficulties.

1. Technical. Every time I have tried to go to your home page I have had a bug. It may be deliberate punishment by Geocities, but when I try to close the words from "one of our sponsors", put up by Geocities, it reports an error in Java script and my computer loads several more copies of Netscape, all with the same word from "one of our sponsors". Perhaps this is because I am operating Netscape Navigator 2.0 which was produced in 1995. Perhaps if any other subscriber has had difficulties accessing your site may be they can write to you directly, because presumably you do not have any difficulties so you are unaware of the problem.

2. In terms of conventions of communication these mailing lists have difficulty doing justice to long articles. The speed of response is so rapid it favours contributions of a couple of paragraphs only. I have had difficulty with long articles myself. I think your solution of using a home page is a good one but we have yet to learn as an internet community how to combine reference to a long reasoned text and an e-mail list. Perhaps your insistence on making the connection will help to develop that culture.

There are also different cultures of discourse. What comes over to a western reader as the very polite tone of your letter to a professor may at first glance obscure for us the fact that major conflicting views may be at stake.

What I have however done is to catch at least a summary paragraph of one of your articles. I am not an economist but I will try to make some comments:


>>>>>>>>>>>>>>>>>>>>

To sum up, the best way I suggest to solve unemployment is: first, let labourer find jobs for themselves, and let the funds and labour force flow freely. When labourer really can't find jobs themselves, the government comes forward, and offers money and finds jobs for them. Finally, the daily working time for every labourer can be cut down so as to solve unemployment. I'd like Professor Deng to make comments on my above-mentioned views. Thanks.

<<<<<<<<<<<<<<<<<<<<

I would be particularly interested to hear from you to what extent economic debate in the PRC is influenced by marxist concepts still. Your article does not appear to be consciously linked to these. You are writing I think from a special economic development zone where various economic models are being tried out. Granted your focus is on amending Keynesianism, but it is not clear to what extent you accept a premise that the economy should in some sense be socialist.

Under capitalism, marxists would say unemployment is inevitable. From this point of view your first proposition is logical: "let labourers find jobs for themselves". In marxist terms this means let the price of labour fall to the point where they are on the margin of subsistence even if that means the average level of subsistence of the whole labour force falls. This may be more acceptable if there is confidence that the market is increasing the efficiency of production so that there is a fall in the cost of use values as well, even to the extent that the labourers' material standard of living may rise, while labour's share of the total exchange value of the society falls.

Your proposition that funds and labour force should flow freely, essentially sounds like a neo-liberal argument that has worked in a very dynamic way in southern China. However the tide IMO is turning in the west in the direction of seeing the need for more control over the economy. Just one example, in Britain yesterday the New Labour government has introduced a transport policy of a very timid nature, but which essentially accepts the implication that in a mass democracy not everyone can have unrestricted access to the use of a car all the time. Its proposal for example that company car parking space should be taxed has not been greeted with denunciation by the business community as old style socialism. When Hong Kong, Shenzen and Canton form a giant megalopolis of 100 million people, civil society will itself demand social control over the free flow of capital and labour, I would suggest. The labour power themselves start demanding a better quality of life.

"When labourer really can't find jobs themselves, the government comes forward, and offers money and finds jobs for them."

I have not been able easily to read your whole article to understand the assumptions about how this will be done, but in the capitalist west it is regarded as quite complicated. The massive direction of public funds into uncompetitive enterprises, often old steel factories or shipyards etc, is a subsidy for the rate of profit of the capitalists running these enterprises which was ridiculed as looking after "lame ducks". That merely postponed the day that these industries would be defeated by competition from South Korea for example.

The New Labour government is experimenting with tax credits allowing certain types of worker to work on top of their benefit without losing it, by treating it as a tax credit. This is a subsidy to the individual worker, but in Keynesian terms it may have the advantage of promoting the circulation of economic activity and it has the hidden benefit from a capitalist point of view of further adding to labour competition and forcing down the price of labour power. Similarly New Labour policies on promoting nurseries and child care look from one point of view very enlightened but will force down the price of labour by allowing more women to compete in the labour market.

As you presumably understand, much of the anxiety in the west about the economy is fear of competition with the type of labour power flocking to southern China willing to work at rates perhaps 30 times less than in the west, (at least as translated by current exchange rates). From a point of view of simple worker solidarity between west and east, any downward pressure on your labour rates, such as you appear to support, is potentially bad news for western workers.

"Finally, the daily working time for every labourer can be cut down so as to solve unemployment."

Such ideas surface in the left and the trade union movement at times of recession in western Europe as an apparently socialised way of dealing with the crisis. But they leave out of account that the workers must accept a proportionate reduction in pay, otherwise it will hit the profits of the capitalists and they will go out of busines, which will not exactly help the employment position.

Some sections of society in the west are consciously competing less and accepting a lower standard of living as a result, by part time work and by adopting alternative life styles, for example consciously going back to a vegeterian diet. But there is no social way of promoting this, at present in use. I am in favour of "Basic Income", a tax credit for *all*, whether they work or do not, which would facilitate this on a case by case basis which would allow the state to guide the economy but avoid the attacks on socialism of being commandist. But it will have an uphill struggle to catch on because it looks like an additional tax expense when the neo-liberal tide against government expenditure is running strong, and because the left can see that whenever a government wants to hit the workers it could delay raising the basic income in line with inflation. If it was used everywhere as an open way the advanced capitalist countries subsidised their work force from the benefits of unequal global exchange, it would facilitate the gradual comparative sinking of wage rates in the privileged western countries to those of the east. A proposition that IMHO could not be ruled out by democrats in the west.

Overall your position does not seem to see any explicit relevance for the marxist theory of value (exchange value). You are prepared to see the exchange value of wages fall for the sake you see of fuller employment and fuller productivity. But the catch in any capitalist system is that capital accumulates to the point where it can no longer maintain the same rate of profit out of the finite overall total social value of the society. A crunch comes between the need for capital to go on accumulating surplus value, and the restricted purchasing power of the masses. This takes the form of a glut of overproduction. Your proposals do not help this, indeed in terms of exchange value the workers would become poorer. Yet the crisis of the east at present is a crisis of overproduction. Who is going to buy all your goods?

The catch is that under a capitalist system, and I suspect a semi-capitalist one, capital must itself periodically be destroyed before economic activity can pick up again. There are various ways this happens, cataclysmic or hidden, but it must happen. I am not an expert on Keynes, certainly in comparison to others on this list, but I suspect to the extent that his ideas seemed to work, they were because his proposals allowed a gradual comparative devaluation of capital relative to the total social capital at a time when the total value of western economies was rising through unequal exchange with the rest of the world.

Your interest in Keynes now is not an abstract one but is in a number of contexts. One is clearly the acceleration of market forces in the PRC. Another is whether the unequal global relations between for example your country and mine will continue.

I suspect where Keynes has any currency, it is now applicable only on a global level, for example by the printing and distribution of IMF special drawing rights, hopefully for a better purpose than shoring up the Russian economy while they try again hopelessly to introduce neo-liberal measures, merely because they have still got an alarming number of nuclear missiles and are rather unpredictable.

I hope these comments allow some sort of dialogue to bridge different circumstances and perspectives.

Chris Burford

London

At 05:10 AM 7/21/98 +0800, you wrote:
>The final result of the development of social economy:
>the stage of time-decreasing in work.
>
>My article (1)"ON THE DEVELOPMENT OF SOCIAL ECONOMY"
><http://www.geocities.com/WallStreet/Exchange/3058/> taking
>unemployment as a clue, explains in detail the four stages of social
>economy and points out the final result of the development of social
>economy "The fourth stage: the stage of time-decreasing in work". Do
>you think whether there is some other final result? If any, please
>point it out.
>
>
>
>--
>Sincerely,
>Ju-chang He
>
>SHENZHEN, P.R. CHINA
>E-mail address: <chang at public.shenzhen.cngb.com>
>Welcome to visit My Home Page at
><http://www.geocities.com/WallStreet/Exchange/3058/>
>
>



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