Why China has planning and the U.S. doesn’t

Andy Stern, former head of the giant Service Employees union in the United States, recently visited China as part of a delegation organized by the China-United States Exchange Foundation and the Center for American Progress. Stern, knowing very well that U.S. workers are in the midst of a long-term crisis of unemployment that shows no letup, was highly impressed with the goals of China’s 12th five-year plan, which were explained to the visiting group by high-ranking Chinese officials.

As he wrote in an op-ed column published Dec. 1 in no less than the Wall Street Journal, entitled “China’s Superior Economic Model,” China is aiming for “a 7 percent annual economic growth rate; a $640 billion investment in renewable energy; construction of 6 million homes; and expanding next-generation IT [information technology], clean-energy vehicles, biotechnology, high-end manufacturing and environmental protection — all while promoting social equity and rural development.”

Stern did not scoff at these projections, nor did the pre-eminent newspaper of U.S. capitalism add any skeptical words. They both know from experience that China does not fall below its growth projections. On the contrary, it often exceeds them. Meanwhile, the capitalist world is reeling from crisis to crisis.

Stern said, “Our delegation witnessed China’s people-oriented development in Chongqing, a city of 32 million in Western China, which is led by an aggressive and popular Communist Party leader — Bo Xilai. A skyline of cranes are building roughly 1.5 million square feet of usable floor space daily — including, our delegation was told, 700,000 units of public housing annually. Meanwhile, the Chinese government can boast that it has established in Western China an economic zone for cloud computing and automotive and aerospace production resulting in 12.5 percent annual growth and 49 percent growth in annual tax revenue, with wages rising more than 10 percent a year.”

Stern knows how difficult it is for U.S. unions to negotiate even a 1 percent raise in the present economic environment. And he knows how every public service and program is being cut back right now.

Stern quotes from Intel chairperson Andy Grove, a big U.S. capitalist, and Asia Society head Orville Schell, a leading bourgeois intellectual, to argue that the “free-market model” so highly touted for years in this country needs “modification.” Finally he puts forward his own proposal: “America needs to embrace a plan for growth and innovation, with a streamlined government as a partner with the private sector.”

Lack of planning, he says, is the reason the U.S. is falling behind.

By writing this piece for the Wall Street Journal rather than a union or working-class newspaper, Stern is clearly appealing to U.S. capitalists to alter their thinking and embrace government planning for their own good. He even accedes to their demands for a “streamlined” government — meaning layoffs and budget cuts — probably hoping this will help win them over.

Unfortunately, he is spitting in the wind.

What makes planning possible?

It’s not that capitalist governments are incapable of planning. Even the U.S. government has an energy plan, a transportation plan, a plan to remodel health insurance, a plan to devise many new weapons systems, a plan to build more prisons, etc. Of course these plans are woefully inadequate when it comes to addressing the huge problems of unemployment, environmental degradation, a crumbling infrastructure and so on.

What the U.S. capitalist government does not have, and cannot have, is an overall plan for the economic development of the country. Yet that is exactly what China does have. So why is China so different from all the capitalist countries now experiencing financial and economic crises?

China allows capitalism to exist — it has stock markets, private ownership of some of the means of production, a growing bourgeoisie, and many social features of capitalism, like a big income gap between rich and poor. But it also has state ownership of the commanding heights of the economy, especially the major banks, as well as the industries vital to China’s infrastructure.

That is not the only difference, however. The Chinese state was born out of an earthshaking revolution, led by communists, that continued for decades and mobilized the masses of people to change society on a scale never reached anywhere else. In the 62 years of its existence, this state has been affected by internal struggles, by the growth of the bourgeoisie and also by the pressure of the masses. It has made many accommodations to the “capitalist roaders,” but it has not been overthrown or replaced with a capitalist state. Fundamental institutions, such as massive society-wide government planning for human and social need, remain intact.

China can produce a five-year plan that works because it is not a capitalist state. It can in a few years rebuild an ancient city like Chonqing into a huge and mostly modern metropolis the size of Maine, with 32 million people, because it is not shackled with a political structure run entirely by privately owned banks and real estate interests.

Contrast this with New York City, where it has taken 10 years just to begin rebuilding the area of downtown Manhattan destroyed in the 9/11 attacks and where high rents and lack of public housing leave an untold number homeless, especially in the oppressed Black and Latino/a communities. New York has no lack of construction machinery or skilled workers. What it lacks is a government that uses socialist planning to respond to the needs of the people in crucial areas of life rather than to the financiers, the landlords and the speculators.

Profits at highest level ever

The capitalist ruling class in the U.S. has reached a peak in its ability to siphon off the wealth of society. This was illustrated most graphically in new government figures on the economy reported in the Nov. 25 New York Times (“Off the Charts: For Business, Golden Days; For Workers, the Dross”).

The figures show that in the third quarter of this year, for the first time ever, the percentage of the Gross Domestic Product that went to companies in the form of after-tax profits exceeded 10 percent.

In the same period, the share of the GDP that represents wages and salaries fell below 45 percent, also for the first time ever. And this decline occurred even though the government lumps together workers’ wages with the six- and even seven-figure salaries of the highest executives, which are once again on the rise.

What this shows is that capitalism is working exactly the way it is supposed to: it is accumulating capital in the hands of the already very rich, which means it is extracting surplus value from the hides of the workers as never before. Karl Marx rigorously proved a century and a half ago in his three-volume study of capitalism called “Capital” that the increasing accumulation of profit is rooted in the very essence of capitalist production and cannot be overcome by anything but the organized, militant struggle of the workers themselves.

The workers need a planned economy, not the chaotic and cruel one that capitalism imposes on them, where wars follow recessions and the race for profits never ends. Workers need their talents to be used to build up society, not grow the fortunes of a few. The achievement of a planned economy — a socialist economy — is a job that only they can carry through, not the CEOs of Intel or Chase Manhattan or any other representatives of the exploiting class.