A Look at the Chinese Model – A Non-Capitalist Mode of Development

Juanny Boy: Robert – I have a question about this.

What’s the benefit of Centrally planning industries that are largely not predatory like clothing, computers, etc.?

It seems they are produced less efficiently under Marxism.

But in industries like health care, water, it is a necessity because of the potential for abuse.

I am not a fan of central planning.

However, the Chinese model works very well. 45% of the Chinese economy is publicly owned.

  1. Force public enterprises to compete internationally. Sink or swim. The #2 leading producer of TV’s in the world is a state-owned company in China that is officially owned by its workers.
  2. Chinese public firms compete with each other. So a steel factory in City A would compete with a steel industry in City B.
  3. Chinese public firms are run to make a profit. The profits from public firms simply go back to the various levels of the state and these profits are distributed to the people in a variety of ways. That’s a really cool use of company profits!
  4. Many Chinese public firms are run at a low level such as the municipality level. In other words, many of the firms are run by small cities. The cities compete with each other. Workers own all the companies so as the company makes more money their paychecks go up. Also as the firm does better, the city invests more and more money in the city to make it a more attractive place for workers. For instance, they fix up the workers’ housing and make it a lot nicer. Hence you get a lot of workers coming from all over trying to get jobs in these booming city industries in part because the living conditions are so good.
  5. I understand that once an industry becomes a certain size, the Chinese government simply obtains ownership in the firm. Now how they do this, I have no idea whether they buy in or what. Maybe they own 51%. But I believe they then take a hands off approach and let you run your company any way you want. But I suppose they may want 51% of the profits. I am not sure how it works.

11 Comments

Filed under Asia, China, Economics, Government, Labor, Regional, Socialism

11 responses to “A Look at the Chinese Model – A Non-Capitalist Mode of Development

  1. Yee

    No, state owned corporations aren’t owned by workers, but by state or provincial or city govts. Profit goes to treasury, not workers. Yes, they compete with everyone in the market, just like ordinary businesses. Some even hire Marriott to run their hotels.

    There used to be very small factories, shops, restaurants etc. that owned by the workers, but that was given up at early 90s.

    The state-owned corporations have very complex shareholders nowadays, though the state remains a major shareholder. Most of the huge ones go to stock market. For various reasons, they tried to interweaved more tightly with international capita, I guess to lower the risk of being targeted by sanctions or the likes.

    No, the state doesn’t confiscate or buy out private businesses. If certain industries are of strategy importance e.g. banking, airport, railways, oil, military etc., they simply don’t open the market or open a very limited part. For the rest, you are free to grow big enough to swallow Trump.

    • I read an article that said that all state companies are still officially owned by their workers. They said it was something Mao put in and the Dengists never got around to getting rid of it. What happens is say in the case of the TV manufacturer, the workers get a check for the entire revenue of the firm for that month. Then ~95% is automatically deducted from that check to be plowed back into the business or as profits to go to the Treasury I suppose. However, workers’ paychecks do go up as the firm becomes more profitable.

      This was an article in Time Magazine that told me this, and Time is about as Communist-hostile as any magazine on Earth. At least at the time I read that article, Time said that all state firms are still officially owned by the workers, something Mao put in. I’m sure this was in effect at least when I read that article.

      • Yee

        Perhaps that particular company give some share to the workers, but that practice is not the norm. And almost all companies, state owned or privite, give a yearly bonus to the workers, a tradition.

        Companies are not owned by workers. That was given up in 90s, and even then, it was the very small ones were owned by workers, big ones were state owned.

  2. Yee

    One shouldn’t forget a hard truth — this world is run on money.

    For an underdeveloped country, the biggest problem is that it doesn’t have enough money for investment. You must first be able to make money, then you can talk about how to distribute it.

    Cuba was underdeveloped before Castro. It has no colonies to take money from, not much loans it can get, so it couldn’t accumulate enough money to invest back into other industries.

    Take North Korea, before the fall of Soviet Union, it actually had higher living standard than South Korea in the early 80s. It had investments and trades then.

    • YEE

      South Korea has made a great deal of money from America and the Philippines.

      China has also made money from foreign investments. Especially since it got Hong Kong in the late 90’s.

      Nobody is a Hermit Kingdom anymore.

      • Yee

        HongKong prosperous from being the solo middleman of ALL Chinese trade with the west in trade blockade days. I know because my parents ran a small wholesale business being the supplier to a state owned export company. All export must go through some HongKong company in the old days.

        HK has been losing business since China become more open to the world.

    • Juanny Boy

      YEE
      there actually was a ton of foreign money (American, typically) in their economy, and it produced an economy. The problem was that it was basically all agricultural, with the benefits going to the top. I have heard, it was a sharecropping/Feudal system.

      But things got tough once the U.S. pulled out, the Soviets filled the gap, but after they fell there were some tough times.

    • Juanny Boy

      YEE
      they also, even with Soviet Capital, never really had the ability to industrialize like China (although that did have some negative consequences, ahem)
      Part of it may be population, lower IQ, or other.

  3. YEE This might be true.

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