
Video | Capitalism and development in China and North Korea
Owen Miller •Owen Miller and Gareth Dale discuss the development of China and North Korea through the lens of state capitalist theory
State capitalism and development in East Asia since 1945 was published in paperback by Haymarket books in 2024. In this video Owen Miller, the books editor, and Gareth Dale discuss some of the issues raised in the book with particular reference to China and North Korea.
Edited transcript
Owen Miller
As Pete says we’re doing two meetings, and one is going to be more focused on general state capitalism theory and Russia and this one is more about East Asia which obviously is the main topic of the book. I’ll say something about where the book came from and what the book is trying to address and what state capitalism theory is trying to address.
The book came from being inspired by some Korean comrades who had been applying the IS tradition ideas and state capitalism theory to East Asia, to North Korea, to China and so on. Their work was not really being seen anywhere else or being translated so part of the purpose of the book was to translate that work and make it available, which I think in the end was successful. I suppose also I was inspired by the idea that state capitalism theory as it had been developed by Tony Cliff and then applied in various ways in the IS tradition, had not really been utilised as much as it could be in terms of analysing various parts of the world, and that it that it had a lot to offer. More than just understanding the Soviet Union which I guess is where it really comes from.
So, what is the problem that state capitalism theory tries to address? Well, the first one is that for decades people on the revolutionary left strove to understand the Soviet Union, and then its satellite countries in various ways, and various traditions developed versions of state capitalism theory in trying to understand the Soviet Union as a type of capitalism. State capitalism theory, or theories, became an important way for non-Stalinist socialists to understand those Stalinist regimes. However, I think it’s important to say that state capitalism theory has other uses and other meanings, and I think that this book shows how it can be applied not only to understanding the Stalinist countries but to help to understand the successful, in inverted commas, successful economic development of certain post-colonial countries particularly in East Asia. I’m including China, Korea (two Koreas), Taiwan, some of the smaller tigers like Singapore. These countries went through absolutely, almost you could say, incomprehensible, transformations in the second half of the 20th century in a very short period of time, a very kind of compressed period of modernisation, urbanisation and industrialisation. Even with quite a superficial look you can see that this industrial transformation of East Asian societies had quite marked similarities across a range of very different political regimes, right from Imperial Japan before 1945 through communist China, inverted commas communist post-colonial North Korea and of course even South Korea which was supposedly some kind of liberal market capitalist country.
So, in this edited volume the various authors are all essentially arguing that these great transformations of East Asian countries in the late 20th century were all capitalist transformations in which the state played a leading role, or in some cases a kind of exclusive role, in which it took on the role of capitalists or what Cliff called bureaucratic state capitalism. But there’s a range of different kinds of state capitalisms at play and these state capitalisms have a historical background which we have to take into account as well, where they emerge from. I’ll say something about that in a minute.
I guess one of the things that I wanted to say here was that a book like this is making an argument for something, but it’s also arguing against other explanations. I guess it’s arguing explicitly against the sort of standard left or Stalinist approach to so-called socialist countries like North Korea and China and Vietnam, although Vietnam doesn’t really come up in the book. But it’s arguing against the standard explanation that these are or were socialist countries and they’re socialist because of nationalisation, economic planning and social provisions and so on. It’s arguing against that idea. The book is also explicitly arguing against another kind of theory of development which is developmental state theory. In fact, there’s a whole chapter which deals with this in relation to China. For those who maybe don’t know, developmental state theory, some time ago it became probably the most popular, I guess that would be fair to say probably the dominant within development studies and it’s a sort of institutional somewhat Weberian explanation of why some countries have been successful in developing, and it idealises the Japanese, the post war Japanese state, as the ideal kind of state to intervene in developing countries and direct them towards capitalist economic development. So, it’s arguing against that as well, because quite a few people have argued now that China is another sort of archetypal developmental state.
I suppose I didn’t think about this that much at the time of writing the book, but another thing that it is implicitly arguing against is dependency theory. The idea that was popular, mainly in the 60s and 70s, that capitalism meant that some parts of the world could not be developed and that they were forever in some way subordinate, and there was a very strict kind of international division of labour. But what happened in East Asia in the late 20th century shows that doesn’t really work and I think looking at it through state capitalism theory can provide a better explanation of what was happening. If we go back to look at what Tony Cliff wrote in his article on permanent revolution in 1963, this was an article in which he talked about something called ‘deflected state capitalist permanent revolution’. Very snappy name for theory! But anyway, effectively what he was arguing as I understand it, was that there were a number of countries in which the road to capitalist modernisation is opened up by a kind of revolution from above, a state capitalist revolution. He included within that not just bureaucratic state capitalist countries but also a whole series of post-colonial nationalist regimes like Egypt and so on which went down this path, at least to some extent. Not necessarily with the state standing in to become the main capitalist but some of the way down that road. So, this is an idea that has been around, but it was not one that was developed by Tony Cliff. As far as I know that was the only article where he put forward this idea to some extent.
The rest of the time I’m going to just give some idea of the things that are in the book. Some historical background. What’s the historical evolution of East Asian state capitalism or state capitalisms? We’re not talking about one fixed type. I think in post-colonial East Asia after 1945 you can see two main sources of influence. One is the Japanese late development model which began with the Meiji restoration of 1868, and the other, certainly for China and North Korea, is Soviet industrialization, obviously the other state capitalist model.
When it comes to the first of those, the Japanese model, it was not just a model in terms of practices and ideology. It was physical infrastructure on the ground in East Asia that had been created by the Japanese imperial state alongside the big Japanese conglomerates called Zaibatsu. If you look at the foundational heavy industry of the People’s Republic of China or the DPRK, North Korea, it is basically huge Japanese factories like the Anshan steel complex in northeastern China or the Hŭngnam chemical complex on the east coast of North Korea. There is a physical legacy which helped to provide the foundations for state capitalism. Ideologically did Japan contribute something to this? Yes, to some extent. Both North Korea and China very much disavowed the Japanese colonial past and tried to purge it as much as possible from their vocabulary and practices and ideology, but there definitely are traces of it in terms of the whole notion of collective sacrifice, the systems of mass mobilisation which existed in the late Japanese empire which then were reanimated in new forms in China and North Korea in the 40s and 50s. In North Korea you still see this kind of mass mobilisation of society.
But to talk about the second kind of influence from the experience of Soviet industrialisation. The transplantation of state capitalist ideas and practices from the Soviet Union came through multiple routes into East Asia. In the case of North Korea, as people probably know, it was occupied by the Soviet Union for three years and continued to be heavily dependent on the Soviet Union right through the 1950s and even well beyond that. But of course, the Soviets sent huge numbers of advisers, experts, and engineers into North Korea. The North Koreans and the Soviets engaged together in a massive programme of translation of Soviet books and journal articles, and there was in some cases quite direct scrutiny and intervention from Stalin’s party state apparatus at times.
I’m going to try to say some brief things by way of illustration about the state capitalist systems in North Korea in the early years, and also in China in the early years drawing on a couple of chapters from the book. The chapter on North Korea is by a South Korean socialist Ha-young Kim. She’s focusing a lot on the way in which consumption was subordinated to accumulation in in North Korea’s model of industrialisation. If anyone’s familiar with industrialisation under Stalin in the 1930s it’s very much drawing from that playbook. Although interestingly because this book also covers South Korea you can see quite a lot of parallels there as well. In the 1960’s the South Korean dictator Park Chung Hee pursued a policy of subordinating consumption to accumulation in many different ways, sometimes explicitly, sometimes implicitly. Even to the extent of exporting hundreds of thousands of Koreans to other countries to get them out of the place. So, some illustrations of this. Kim Il Sung took an extreme sort of heavy industry first line in the late 1950s, again drawing on what Stalin had done in the Soviet Union in the first five-year plan, which saw 83% of industrial investment going to heavy industry in the first five-year plan. Bear in mind this is a country struggling to recover from a very devastating war in which it had trouble feeding everyone, it’s had trouble clothing everyone, it’s had trouble providing housing for everyone, let alone more sophisticated consumption items, and yet it put 83% of its investment into heavy industry. Not into light industry which would provide those things which could improve people’s everyday lives. The ratio of investment in heavy industry got higher, by 1970 it was at 88%, so consumption was consistently subordinated to investment. If you look at it just in terms of investment by 1984 it was still increasing. 35% of gross national product in 1984 was being reinvested. You can say it’s a form of primitive accumulation what Marx talked about in Capital, the idea that you kick start industrial accumulation by drawing sources of capital from almost outside the system. This was done on the largest scale really by collectivising the whole agricultural system. So, from 1953 to 1958, over 5 years, they engaged in mass collectivisation of agriculture which essentially took away from the peasants any control over what they were farming and how they were farming, or where the surplus of their agriculture was going. So, the main mechanism for this was compulsory purchase of agricultural surplus at low prices from the collective farms. But also, to provide the farms with the inputs and the plans of what they should be growing, essentially to turn almost the entire farming sector in the space of a few years into a proletarian, capitalist agricultural system. There’s a lot about the ecological stuff that goes with that which is what I’m writing about at the moment which I could talk about, but I won’t mention it at this point. Another feature of North Korea’s industrialization drive after the war in the 1950s was what I would call extreme productivism, in a sense production and productivity became the be all and end all of life in the DPRK in the 1950s. This took the form of things like introducing piece rates, again this was copying something that the Russians had done in the 1930s. Constant speed up campaigns, Stakhanovist production campaigns, economisation campaigns. If you are a worker in North Korea in the 1950s your entire life revolved around basically having as much value squeezed out of you as possible and you had to be an enthusiastic participant in that process. Because of the research I’ve been doing for a book I’m writing now I’ve been reading quite a lot of North Korean media, you know journals, magazines, newspapers from the 1950s and early 60s and it’s just incredible the extent to which this kind of productivism dominated everything. Absolutely everything was dominated by the need to produce more with less.
I want to say something about China. I have to keep this very brief. There’s a very interesting chapter in this book by another Korean socialist Yong-uk Kim which is about China. It’s based on his own original research, in primary sources from 1950s China. The argument he makes in the end is the extent to which we have some myths about this period of China, that somehow it was the age of the iron rice bowl, that is the idea that if you were a worker in industry you could have a very stable secure job and you maybe you didn’t live extremely well but you could have a sort of guaranteed income and food on the table and so on. He’s arguing that that’s actually not true, or not true to the extent that people have claimed, and that the Chinese state in the late 1950s was already a very state capitalist state, engaged in trying to raise productivity and trying to calculate productivity against other global capitalist states in such a way that it could ascertain what you might call the international socially necessary labour time. In order to understand the extent to which it was up to global standards. It makes a very interesting argument and I’m not sure I’m doing it great justice right now, but in the process of this the Chinese state was also frequently engaged in mass layoffs, in keeping wages down as much as possible. Again, the introduction of piece rates happened in North Korea at this time as well.
I thought I’d just finish off with a little bit of comparison between North Korea and China. I think perhaps one other thing people may be curious about is why these two countries ended up being so different when they came from quite a similar place in certain ways. They were born at about the same time, within a year or so of each other, and they both basically adopted the Stalinist model of industrialisation, the Stalinist state capitalist model, but they ended up quite different. Of course one is an absolutely massive, almost subcontinent size country with now 1.4 billion people or something and North Korea is only half of a pretty small peninsula which has about 25 million people, so they’re very difficult to compare in that sense, but one of the things that has to be pointed out immediately about North Korea is that it has always been half of a partitioned country and that it has been engaged permanently in a state of competition and near warfare at all times with this other half. That creates a very particular kind of country.
Another thing to mention before I finish is that the decisive change that China made in the late 1970s was to turn outwards to a kind of internationalisation of this state capitalist model. To bring in investments from outside to begin to produce for an international market for export and so on, and to privatise some parts of the economy as well, and that was a decisive change that was made, and it turned out to be successful for the Chinese ruling class. North Korea did not do that. I think again that comes back down to it being part of a partitioned country although it is worth just noting that in the 19 in the early 1970s North Korea did for a little while try to turn outwards and to begin to internationalise its state capitalism a little bit, but unfortunately it did it exactly at the moment when the first oil shock happened, which caused a massive international recession, and this meant that the value of its exports plummeted. It was exporting minerals, and the value of its exports plummeted, and it found itself in a big debt trap. It has actually never paid off its debts to various countries from the early 1970s. If I had my slides, I would show you a slide of the famous Volvos of Pyongyang. In about 1974 North Korea established diplomatic relations with Sweden and one of the first things it did was to buy 1000 Volvos from Sweden. But it never paid for them. Apparently if you look around carefully in Pyongyang to this day you can still see the old Volvo around. I guess they are like the North Korean version of those amazing American cars in Havana. North Korea was never successful in internationalising and has to this day been stuck in a kind of autarchic loop which it has turned into virtue I suppose by calling it Juche and raising it to the level of an ideology.
Gareth Dale
First off, I just want to say that this is a wonderful book, it’s a really incredible amount of work put into it, gathering together comrades from East Asia to produce chapters on various countries to compare different forms that state capitalism takes in different historical periods in different countries. In the next meeting about the book, I’m going to be focusing on more theoretical questions, not just looking at Russia, mainly looking really at the world system as a whole, because state capitalism is an element within every part of the system. That’s not just certain state capitalist models, it’s a principle in a sense that it permeates the system. So, I’ll be talking a little bit more theoretically next time.
Just now in the few minutes I have I’m going to do the opposite and talk about my own experience. In order to prepare for this meeting, I went over to China last month. It ws for other reasons as well! It’s a fascinating country to visit. I just want to share a few impressions with you. The caveat is of course that these are impressions, but we can discuss. One is that you know walking around Chinese cities you are struck by just how similar in some ways, in many ways, it is to the western developmental model, the western urban model. America and China feel very similar to me. They’re built on very similar material foundations as all capitalist countries. Lots of concrete, lots of coal for energy, a lot of cars. It’s a very profligate developmental model, with very high carbon emissions. Per capita China’s carbon emissions are higher than Britain’s these days. It’s a kind of breakneck development model, like in America nothing can be allowed to get in the way of business. There are of course some differences. It’s been mentioned, these are economies very heavily geared to accumulation and away from consumption more than in the United States. There’s more public transport in China than in the US.
I spoke to a lot of people, I was in Beijing, and you’re struck very strongly by what an incredibly polarised society China is. There’s incredible polarisation between the poor and the rich and between the cities and the countryside. If you have the bad luck to be born in the countryside and you migrate to the city and then you have children, your children will not be allowed to move to the city so there’s a barrier enclosing the better off city folk and protecting them against the incursion from the countryside. The ban on bringing children with you to the cities is really quite an astonishing restriction on peasant mobility. So, you have the fascinating irony in China that this was a peasant revolution so-called which has led to the absolute domination of cities over the countryside. I was struck in China by how astonishingly controlled and oppressive the society is. There is no oppositional discussion except in very small groups was the impression I got and what people were telling me. Everywhere you go you are aware that the state forces are controlling society in an incredibly detailed way and very effectively as well at the moment. There have been explosions as of a couple of years ago in the November protests that began in Urumqi in Xinjiang and spread outwards. There is obviously a lot of discontent especially among young people, but it remains an exceptionally controlled society. I was struck too by talking to supporters of the regime and it’s fascinating asking people what they think communism is and what is communist about China. The first responses I got were along the lines – well it’s quite a state directed society and economy and to which I would reply well Britain was in the Second World War does that mean Britain went communist during the Second World War. They weren’t sure how to answer that. The next response was – well you know we have quite a high level of public transport – we do in Britain as well – health and education they are largely state run – yeah in Britain as well – and then eventually my interlocutors, students, basically regime supporting students, ended up by saying well they think the real essence of communism really is that there’s not much criminality in China, the streets are relatively safe, unlike in the West where you’re likely to be knifed or mugged if you walk down London streets. There’s a very strong level of support among the middle classes, the beneficiaries of the system, for this ‘communist’ project but communism basically means just the existing order and not much more than that. It reminded me of living in East Germany where you’d get similar answers to this sort of question.
Owen Miller
If I come back on a couple of things very quickly. I know we should let other people say things. It was just interesting what you say when you said that they were left with all there is to say that there is a lack of criminality. Then I would say I guess Singapore is also communist and South Korea is also communist because in South Korea there may be all kinds of criminality but it’s not a country where you experience criminal violence on a day-to-day basis. It’s a ‘safe’ country.
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