[...] Today, the growth of economies formed by workers' revolutions, particularly China, tends to introduce some stability into the world economy. China's potential stabilizing role is why I am still reluctant to call the present crisis a "general crisis" of disproportionality, although it could rapidly turn into one if the dollar collapses, bringing down world trade with it, or if China falls to counterrevolution, as with the USSR and eleven other states under similar pressures in the 1980s. Although counterrevolution is by no means inevitable, both domestic and international measures are necessary to avoid it. Cuba survived such attempts in the 1980s – thanks in large part to internal strengths, but it is once again coming under immense pressure.
To understand this point more fully, contrast China to Mexico, one of the United States' largest trading partners. Per capita, Mexico's trade with the US is far higher than China's. US exports to Mexico by the end of 2008 were about double total US exports to China, according to US government data. So why isn't Mexico significant as a stabilizing force on the US economy (and indirectly, the world)?
The fundamental difference between China and Mexico is that the former is a product of socialist revolution and so has some control over its economy, while Mexico's socialist revolution is still ahead of it. Capitalism's "control" in Mexico is only over distribution of pain in a crisis it cannot control.
Mexico has suffered at least three devastating crises over the past 30 years, major damage to its basic industrial capacity. Real wages today are significantly lower than they were 30 years ago, in part due to sharp currency devaluations. A big part of Mexico's imports are for processing and re-export to the US, adding to problems with "overproduction" and "overcapacity," i.e. disproportionality. It may be about to suffer even more than it has in recent decades. Already, Mexico's currency has depreciated sharply in recent weeks, effectively cutting wages and the standard of living.
By contrast, China has now gone over 40 years without a downturn, and 30 years averaging 9.8 percent annual growth; real hourly workers' wages have been rising at least nine percent a year for over a decade. The net effect is that China's economic activity as a whole tends toward stability while Mexico's (and other capitalist countries) tends to cyclical crisis and instability.
For all of the talk about China's exports (which are smaller than Germany's, even though China's population is fifteen times larger), China's imports are intended primarily to serve domestic needs. Directly or indirectly, China has accounted for some 30 percent of the growth in the world economy in recent years, possibly more. China's purchases from Japan, Thailand, Indonesia, South Korea, etc. not only have helped keep those economies from freezing up, e.g. in the face of the crisis of 1997, but have also allowed them to continue purchasing from the US – and to service their massive debts, which can be traced back (sometimes indirectly) to Wall Street.
While China's economic strength has so far resisted the global downturn, it hasn't been free of problems and vulnerabilities. This is attributable to the fact that China still exists within a world capitalist system on which it depends for investment, resources and trade. Growth of China's industrial production has slowed from a rate of 20 percent at the end of 2007 and 14 percent this past summer to eight percent currently. Further decline of the dollar and instability in currencies will affect China's ability to sustain internal investment. To offset this, China is considering abandoning the dollar as a major currency reserve.
The stabilizing tendency of China's economic power indicates the relative strength of the working class. The key question now is how this strength will be used. Will it strengthen workers' power, or attempt to maintain an unsustainable status quo? One positive sign of the direction China is going can be found in the different responses to the global crisis by the US and Chinese governments. While the Bush administration poured $700 billion into propping up banks, China has pledged almost $600 billion for affordable housing and necessary infrastructure. [...]
Full at: http://www.politicalaffairs.net/article/view/7778/1/355/
-- Jenny Brown