Business history

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Business_history 

Business history is a historiographical field which examines the history of firms, business methods, government regulation and the effects of business on society. It also includes biographies of individual firms, executives, and entrepreneurs. It is related to economic history. It is distinct from "company history" which refers to official histories, usually funded by the company itself.

United States

Robber baron debate

Even before academic studies began, Americans were enthralled by the Robber baron debate. As the United States industrialized very rapidly after the Civil War, a few hundred prominent men made large fortunes by building and controlling major industries, such as railroads, shipping, steel, mining and banking. Yet the newer who gathered the most attention was railroader Cornelius Vanderbilt. Historian Stephen Frazier argues that probably most Americans admired Vanderbilt; they agreed with biographer William Augustus Croffut who wrote in 1886:

It is now known that the desire to own property is the chief difference between the Savage and the enlightened man; that aggregations of money in the hands of individuals are in inestimable blessing to Society, for without them there could be no public improvements or private enterprises, no railroads or steamships, or telegraphs; no cities, the leisure class, no schools, colleges, literature, art – in short, no civilization. The one man to whom the community owes most is the capitalist, that the menu gives, but the man who saves and invests, so that his property reproduces and multiplies itself instead of being consumed.

However, Fraser goes on, there was a minority who vehemently dissented:

A minority were irate and excoriated the titans of finance and industry as 'robber barons' and worse. E.L. Godkin, founder of The Nation, launched a volley of invective at the new plutocracy: 'kings of the street' like Vanderbilt displayed 'unmitigated and immitigable selfishness' as appalling as their 'audacity, push, unscrupulousness and brazen disregard of others' rights'.

By the Great Depression of the 1930s, Fraser continues:

Biographies of Mellon, Carnegie and Rockefeller were often laced with moral censure, warning that 'tories of industry' were a threat to democracy and that parasitism, aristocratic pretension and tyranny have always trailed in the wake of concentrated wealth, whether accumulated dynastically or more impersonally by the faceless corporation. This scholarship, and the cultural persuasion of which it was an expression, drew on a deeply rooted sensibility–partly religious, partly egalitarian and democratic–that stretched back to William Jennings Bryan, Andrew Jackson and Tom Paine.

However a counterattack by academic historians began as the Depression ended. Business historian Allan Nevins challenged this view of big businessmen by advocating the "Industrial Statesman" thesis. Nevins, in his John D. Rockefeller: The Heroic Age of American Enterprise (2 vols., 1940), took on Josephson. He argued that while Rockefeller may have engaged in some unethical and illegal business practices, this should not overshadow his bringing order to industrial chaos of the day. Gilded Age capitalists, according to Nevins, sought to impose order and stability on competitive business, and that their work made the United States the foremost economy by the 20th century. Business journalist Ferdinand Lundberg later criticized Nevins for confusing readers. By contrast, historian Priscilla Roberts argues that Nevins' studies of inventors and businessmen brought about a reassessment of American industrialization and its leaders. She writes:

Nevins argued that economic development in the United States caused relatively little human suffering, while raising the general standard of living and making the United States the great industrial power capable of defeating Germany in both world wars. The great capitalists of that period should, he argued, be viewed, not as 'robber barons', but as men whose economic self-interest had played an essentially positive role in American history, and who had done nothing criminal by the standards of their time.

Historians have followed Nevins' lead in writing biographies of the major industrialists of the Gilded Age. These include:

• David Cannadine, Mellon: An American Life (New York: Alfred A. Knopf, 2006)
• Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Atlantic Monthly Press, 1990)
• Ron Chernow, Titan: The Life of John D. Rockefeller, Sr. (New York: Random House, 2007)
• George Harvey, Henry Clay Frick: The Man (Washington, D.C.: Beard Books, 2002)
• David Nasaw, Andrew Carnegie (New York: Penguin Press, 2006)
• T.J. Stiles, The First Tycoon: The Epic Life of Cornelius Vanderbilt (New York: Alfred A. Knopf, 2009)
• Jean Strouse, Morgan: American Financier (New York: Random House, 1999)

Though these later biographers did not confer heroic status on their subjects, they used historical and biographical investigations to establish a more complex understanding of the American past, and the history of American economic development in particular.

In 1958 historian Hal Bridges finds that "The most vehement and persistent controversy in business history has been that waged by the critics and defenders of the 'robber baron' concept of the American businessman." In terms of the Robber Baron model, by the end of the 20th-century scholars had mostly discarded it although it remained influential in the popular culture. Richard White, historian of the transcontinental railroads, stated in 2011 he has no use for the concept because it had been killed off by historians Robert H. Wiebe and Alfred Chandler. He notes that "Much of the modern history of corporations is a reaction against the Robber Barons and fictions."

Academic studies

Meanwhile, business history as an academic discipline was founded by Professor N. S. B. Gras at the Harvard University Graduate School of Business Administration, starting in 1927. He defined the field's subject matter and approach, wrote the first general treatise in the field, and helped Harvard build a tradition of scholarship as well as the leading library in the field. He edited a series of monographs, the Harvard Studies in Business History. He also served as editor of the Bulletin of the Business Historical Society (1926–1953), a journal which later became the Business History Review (1954-date). N.S.B. Grass and Henrietta M. Larson, Casebook in American business history (1939) defined the field for a generation.

Business history in the U.S. took off in the 1960s with a high volume of products and innovative methodologies. Scholars worked to develop theoretical explanations of the growth of the business enterprise, the study of strategy and structure by Alfred Chandler being a prime example. The relationship between business and the federal government became a focal point of the study. On the whole, the 1960s affirmed the conclusions of the earlier decades regarding the close interrelationship between government and business enterprise.

Ranking entrepreneurs and management theorists

A 2002 survey of 58 business history professors gave the top spots in American business history to Henry Ford, followed by Bill Gates; John D. Rockefeller; Andrew Carnegie, and Thomas Edison. They were followed by Sam Walton; J. P. Morgan; Alfred P. Sloan; Walt Disney; Ray Kroc; Thomas J. Watson; Alexander Graham Bell; Eli Whitney; James J. Hill; Jack Welch; Cyrus McCormick; David Packard; Bill Hewlett; Cornelius Vanderbilt; and George Westinghouse. A 1977 survey of management scholars reported the top five pioneers in management ideas were: Frederick Winslow Taylor; Chester Barnard; Frank Bunker Gilbreth Sr.; Elton Mayo; and Lillian Moller Gilbreth.

Chandler

After 1960 the most influential scholar was Alfred D. Chandler (1918-2007) at the Harvard Business School. In a career that spanned over sixty years, Chandler produced numerous groundbreaking monographs, articles, and reviews. Intensely focused on only a few areas of the discipline, Chandler nonetheless succeeded in establishing and developing an entirely new realm of business history.

Chandler's masterwork was The Visible Hand: The Managerial Revolution in American Business (1977). His first two chapters looked at traditional owner-operated small business operations in commerce and production, including the largest among them, the slave plantations in the South. Chapters 3-5 summarize the history of railroad management, with stress on innovations not just in technology but also in accounting, finance and statistics. He then turned to the new business operations made possible by the rail system in mass distribution, such as jobbers, department stores and mail order. A quick survey (ch 8) review mass innovation in mass production. The integration of mass distribution and mass production (ch 9-11) led to many mergers and the emergence of giant industrial corporations by 1900. Management for Chandler was much more than the CEO, it was the whole system of techniques and included middle management (ch 11) as well as the corporate structure of the biggest firms, Standard Oil, General Electric, US Steel, and DuPont (ch 13-14). Chandler argued that modern large-scale firms arose to take advantage of the national markets and productive techniques available after the rail network was in place. He found that they prospered because they had higher productivity, lower costs, and higher profits. The firms created the "managerial class" in America because they needed to coordinate the increasingly complex and interdependent system. This ability to achieve efficiency through coordination, not some anti-competitive monopolistic greed by robber barons, explained the high levels of concentration in modern American industry.

Chandler's work was somewhat ignored in history departments, but proved influential in business, economics, and sociology departments. In sociology, for example, prior to Chandler's research, sociologists assumed there were no differences between governmental, corporate, and nonprofit organizations. Chandler's focus on corporations clearly demonstrated that there were differences, and this thesis has guided organizational sociologists' work since the 1970s. It also motivated sociologists to investigate and critique Chandler's work more closely, turning up instances in which Chandler assumed American corporations acted for reasons of efficiency when they actually operated in a context of politics or conflict. Other historians, such as Gabriel Kolko, challenged the very notion of "efficiency through coordination", arguing instead that big business had, for reasons of inefficiency and a dislike of market discipline, openly sought government assistance to keep market forces at bay.

Other mechanisms

Lamoreaux et al. (2003) offers a new synthesis of American business history during the 19th-20th centuries. Moving beyond the markets-versus-hierarchies framework that underlies the previously dominant interpretation of Chandler, the authors highlight the great variety of coordination mechanisms in use in the economy at any given time. Drawing on late-20th-century theoretical work in economics, they show how the relative advantages and disadvantages of these different mechanisms have shifted in complex and often unpredictable ways as a result of changing economic circumstances. One advantage of this perspective is that it avoids the teleology that has characterized so much writing in the field. As a result, the authors can situate the "New Economy" of the late 20th century in broad historical context without succumbing to the temptation to view it as a climactic stage in the process of economic development. They thus provide a particularly persuasive example of the importance of business history to the understanding of national and international history.

Comparative

Understanding the development of business history as a discipline meriting its own aims, theories and methods is often understood as a transition from dominating themes of 'company biography', toward more analytical 'comparative' approaches. This 'comparative' trend enabled practitioners to underline their work with 'generalist' potential. Questions of comparative business performance have become a staple, featuring into the wider economic histories of nations, regions, and communities. For many, this transition was first achieved by Alfred D. Chandler. Chandler's successors as Isidor Straus Professor of Business History at Harvard Business School continued to emphasize the importance of comparative research and course development. In 1995 Thomas K. McCraw published Creating Modern Capitalism (Cambridge, MA 1995)  This book compared the business histories of Britain, Germany, Japan, and the United States since the Industrial Revolution, and was used as the text of a new year MBA course at Harvard Business School. Geoffrey Jones, who was McCraw's successor as Isidor Straus Professor of Business History, also pursued a comparative research agenda. He published a comparative study of the history of globalization called Multinationals and Global Capitalism (Oxford, 2005). In 2010, Jones also published a comparative history of the global beauty industry entitled Beauty Imagined: A History of the Global Beauty Industry (Oxford, 2010). More recently, Jones and the Business History Initiative at the Harvard Business School has sought to facilitate research and teaching on African, Asian and Latin American business history in a project called Creating Emerging Markets, which includes interviews with long-time leaders of firms and NGOs in those regions.

A trend in recent years has been to compare the business histories of individual countries. Geoffrey Jones (academic) and Andrea Lluch have published a comparative study of the historical impact of globalization on Argentina and Chile. In 2011 Jones and his co-editor Walter A. Friedman published an editorial in Business History Review which identified comparative research as essential for the future of business history as a discipline.

France

American historians working in French business history led by Rondo Cameron argued that most of the business enterprises in France were family-owned, small in scale, and managed conservatively. By contrast, French business historians emphasized the success of national economic planning since the end of World War II. They argued that the economic development in this period stemmed from various phenomena of the late 19th century: the corporation system, the joint-stock deposit and investment banks, and the technological innovations in the steel industry. To clarify the contributions of 19th-century entrepreneurs to the economic development in France, French scholars support two journals, Enterprises et Histoire and Revue d'Histoire de la Siderurgie.

Latin America

Barbero (2008) examines the development of the field of Latin American business history, from the 1960s to 2007. Latin American business history developed in the 1960s, but until the 1980s it was dominated by either highly politicized debates over Latin American underdevelopment or biographies of Latin American entrepreneurs. Since the 1980s, Latin American business history has become a much more professionalized and an integrated part of Latin American academia. It is much less politicized and has moved beyond entrepreneurial biography to histories of companies and industries. However, Latin American business historians have still not devoted enough attention to agricultural enterprises or comparative histories between the many countries. Probably most importantly, Latin American business historians have to become much more versed in business history theory and methodology so as to get beyond mere summation of the region's economic past.

In the 1980s, numerous governments in Latin America adopted neoliberal policies. In Mexico, for example, under presidents Carlos Salinas de Gortari (1988-94) and Ernesto Zedillo neoliberalism became the basis for state-private sector relationships. The new policy allowed for close cooperation with United States and Canada as exemplified by the North American Free Trade Agreement (NAFTA) solidified a strategic alliance between the state and business. In Brazil The key policy was privatization of nationalized industries especially steel through the 'Programa Nacional de Desestatizção' (National Program of Destatization) during the early 1990s. It aimed to implement a new industrial policy by restructuring the industry and reforming labor-business relations.

The Common Market of the South, or Mercosur, is a South American commerce pact started in 1991 among Argentina, Brazil, Paraguay, and Uruguay at the instigation of Argentina and Brazil. Mercosur's purpose is to promote free trade and the fluid movement of goods, people, and currency. Since its foundation, Mercosur's functions have been updated and amended many times; it currently confines itself to a customs union, in which there is free intra-zone trade and common trade policy between member countries.

Britain

Business History in Britain emerged in the 1950s following the publication of a series of influential company histories and the establishment of the journal Business History in 1958 at the University of Liverpool. The most influential of these early company histories was Charles Wilson (historian)’s History of Unilever, the first volume of which was published in 1954. Other examples included Coleman's work on Courtaulds and artificial fibers, Alford on Wills and the tobacco industry, Barker on Pilkington's and glass manufacture. These early studies were conducted primarily by economic historians interested in the role of leading firms in the development of the wider industry and therefore went beyond mere corporate histories. Although some work examined the successful industries of the industrial revolution and the role of the key entrepreneurs, in the 1970s scholarly debate in British business history became increasingly focused on the economic decline. For economic historians, the loss of British competitive advantage after 1870 could at least in part be explained by entrepreneurial failure, prompting further business history research into the individual industry and corporate cases. The Lancashire cotton textile industry, which had been the leading take-off sector in the industrial revolution, but which was slow to invest in subsequent technical developments, became an important topic of debate on this subject. William Lazonick for example argued that cotton textile entrepreneurs in Britain failed to develop larger integrated plants on the American model; a conclusion similar to Chandler's synthesis of a number of comparative case studies.

Studies of British business leaders have emphasized how they fit into the class structure, especially their relationship to the aristocracy, and the desire to use their wealth to purchase landed estates, and hereditary titles. Biography has been of less importance in British business history, but there are compilations. British business history began to widen its scope in the 1980s, with research work conducted at the LSE's Business History Unit, led first by Leslie Hannah, then by Terry Gourvish. Other research centres followed, notably at Glasgow and Reading, reflecting an increasing involvement in the discipline by Business and Management School academics. More recent editors of Business History, Geoffrey Jones (academic) (Harvard Business School), Charles Harvey (University of Newcastle Business School), John Wilson (Liverpool University Management School) and Steven Toms (Leeds University Business School) have promoted management strategy themes such as networks, family capitalism, corporate governance, human resource management, marketing and brands, and multi-national organisations in their international as well as merely British context. Employing these new themes has allowed business historians to challenge and adapt the earlier conclusions of Chandler and others about the performance of the British economy.

Capitalism and Freedom

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Capitalism_and_Freedom 

 

Capitalism and Freedom

Author	Milton Friedman
Cover artist	Steven Cheung
Country	United States
Language	English
Genre	Non-fiction
Publisher	University of Chicago Press
Publication date	1962
Media type	Print (Hardback & Paperback)
Pages	202 (Fortieth anniversary edition)
ISBN	0-226-26421-1 (40th anniversary edition)
OCLC	49672469
Dewey Decimal	330.12/2 21
LC Class	HB501 .F7 2002

Capitalism and Freedom is a book by Milton Friedman originally published in 1962 by the University of Chicago Press which discusses the role of economic capitalism in liberal society. It sold over 400,000 copies in the first eighteen years and more than half a million since 1962. It has been translated into eighteen languages.

Friedman argues for economic freedom as a precondition for political freedom. He defines "liberal" in European Enlightenment terms, contrasting with an American usage that he believes has been corrupted since the Great Depression. His views are especially popular among American conservatives and libertarians.

The book identifies several places in which a free market can be promoted for both philosophical and practical reasons. Among other concepts, Friedman advocates ending the mandatory licensing of physicians and introducing a system of vouchers for school education.

Context

Capitalism and Freedom was published nearly two decades after World War II, a time when the Great Depression was still in collective memory. Under the Kennedy and preceding Eisenhower administrations, federal expenditures were growing at a quick pace in the areas of national defense, social welfare, and infrastructure. Both major parties, Democratic and Republican, supported increased spending in different ways. This, as well as the New Deal, was supported by most intellectuals with the justification of Keynesian economics. Capitalism and Freedom introduces the idea of how competitive capitalism can help to achieve economic freedom.

Chapter summaries

Introduction

The introduction lays out the principles of Friedman's archetypal liberal, a man who supports limited and dispersed governmental power. Friedman opts for the continental European, rather than American, definition of the term.

i. The Relation between Economic Freedom and Political Freedom

In this chapter, Friedman promotes economic freedom as both a necessary freedom and also as a vital means for political freedom. He argues that, with the means for production under the auspices of the government, it is nearly impossible for real dissent and exchange of ideas to exist. Additionally, economic freedom is important, since any "bi-laterally voluntary and informed" transaction must benefit both parties to the transaction. Friedman states that economic freedom protects minorities from discrimination since the market is apathetic to, "their views or color."

ii. The Role of Government in a Free Society

According to the author, the government of a liberal society should enforce law and order and property rights, as well as take action on certain technical monopolies and diminish negative "neighborhood effects." The government should also have control over money, as has long been recognized in the constitution and society.

iii. The Control of Money

He discusses the evolution of money in America, culminating in the Federal Reserve Act of 1913. Far from acting as a stabilizer, the Federal Reserve failed to act as it should have in several circumstances. Friedman proposes that the Federal Reserve have a consistent rule to increase the money supply by 3–5% annually.

iv. International Financial and Trade Arrangements

This chapter advocates the end of the Bretton Woods system in favor of a floating exchange rate system and the end of all currency controls and trade barriers, even "voluntary" export quotas. Friedman says that this is the only true solution to the balance of trades problem.

v. Fiscal Policy

Friedman argues against the continual government spending justified to "balance the wheel" and help the economy to continue to grow. On the contrary, federal government expenditures make the economy less, not more stable. Friedman uses concrete evidence from his own research, demonstrating that the rise in government expenditures results in a roughly equal rise in GDP, contrasting with the Keynesian multiplier theory. Many reasons for this discrepancy are discussed.

vi. The Role of Government in Education

The policy advocated here is vouchers which students may use for education at a school of their choice. The author believes that everyone, in a democracy, needs a basic education for citizenship. Though there is underinvestment in human capital (in terms of spending at technical and professional schools), it would be foolish of the government to provide free technical education. The author suggests several solutions, some private, some public, to stop this underinvestment.

vii. Capitalism and Discrimination

In a capitalist society, Friedman argues, it costs money to discriminate, and it is very difficult, given the impersonal nature of market transactions. However, the government should not make fair employment practices laws (eventually embodied in the Civil Rights Act of 1964), as these inhibit the freedom to employ someone based on whatever qualifications the employer wishes to use. For the same reason, right-to-work laws should be abolished.

viii. Monopoly and the Social Responsibility of Business and Labor

Friedman states, there are three alternatives for a monopoly: public monopoly, private monopoly, or public regulation. None of these is desirable or universally preferable. Monopolies come from many sources, but direct and indirect government intervention is the most common, and it should be stopped wherever possible. The doctrine of "social responsibility", that corporations should care about the community and not just profit, is highly subversive to the capitalist system and can only lead towards totalitarianism.

ix. Occupational Licensure

Friedman takes a radical stance against all forms of state licensure. The biggest advocates for licenses in an industry are, usually, the people in the industry, wishing to keep out potential competitors. The author defines registration, certification, and licensing, and, in the context of doctors, explains why the case for each one of these is weaker than the previous one. There is no liberal justification for licensing doctors; it results in inferior care and a medical cartel.

x. The Distribution of Income

Friedman examines the progressive income tax, introduced in order to redistribute income to make things more fair, and finds that, in fact, the rich take advantage of numerous loopholes, nullifying the redistributive effects. It would be far more fair just to have a uniform flat tax with no deductions, which could meet the 1992 tax revenues with a rate only slightly greater than the lowest tax bracket at that time.

xi. Social Welfare Measures

Though well-intentioned, many social welfare measures don't help the poor as much as some think. Friedman focuses on Social Security as a particularly large and unfair system.

xii. Alleviation of Poverty

He advocates a negative income tax to fix the issue, giving everyone a guaranteed minimum income, rather than current measures, which he sees as misguided and inefficient.

xiii. Conclusion

The conclusion to the book centers on how, time and time again, government intervention often has an effect opposite of that intended. Most good things in the United States and the world come from the free market, not the government, and they will continue to do so. The government, despite its good intentions, should stay out of areas where it does not need to be.

Influence

The effects of Capitalism and Freedom were great yet varied in the realm of political economics. Some of Friedman's suggestions are being tested and implemented in many places, such as the flat income tax in Estonia (since 1994) and Slovakia (since 2004), a floating exchange rate which has almost fully replaced the Bretton Woods system, and national school voucher systems in Chile (since 1981) and Sweden (since 1992), to cite a few prominent examples. However, many other ideas have scarcely been considered, such as the end of licensing, and the abolition of corporate income tax (in favor of an income tax on the stock holder). Though politicians often claim that they are working towards "free trade," an idea the book supports, few American politicians have considered taking his suggestion of phasing out all tariffs in 10 years. Nevertheless, Friedman popularized many ideas previously unknown to most outside economics. This and other works helped Milton Friedman to become a household name. The Times Literary Supplement called it "one of the most influential books published since the war."

Capitalism and Freedom, along with much of Milton Friedman’s writing, has influenced the movement of libertarian and conservative philosophy in America. Milton’s philosophy of economic and individual freedom has pushed similar thinking political parties to emerge, such as the Libertarian Party and the Tea Party.

Capitalism and Freedom made the Intercollegiate Studies Institute's 50 Best Books of the 20th Century and also was placed tenth on the list of the 100 best non-fiction books of the twentieth century compiled by National Review. In 2011, the book was placed on Time Magazine's top 100 non-fiction books written in English since 1923.

Socialist mode of production

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Socialist_mode_of_production

The socialist mode of production, also referred to as the lower-stage of communism or simply socialism as Karl Marx and Friedrich Engels used the terms socialism and communism interchangeably, is a specific historical phase of economic development and its corresponding set of social relations that emerge from capitalism in the schema of historical materialism within Marxist theory.

The Marxist definition of socialism is an economic transition. In this transition, the sole criterion for production is use-value (i.e. direct satisfaction of human needs, or economic demands), therefore the law of value no longer directs economic activity. Marxist production for use is coordinated through conscious economic planning. Distribution of products is based on the principle of "to each according to his contribution". The social relations of socialism are characterized by the proletariat effectively controlling the means of production, either through cooperative enterprises or by public ownership or private artisanal tools and self-management. Surplus value goes to the working class and hence society as a whole.

The Marxian conception of socialism stands in contrast to other early conceptions of socialism, most notably early forms of market socialism based on classical economics such as mutualism and Ricardian socialism. Unlike the Marxian conception, these conceptions of socialism retained commodity exchange (markets) for labour and the means of production seeking to perfect the market process. The Marxist idea of socialism was also heavily opposed to utopian socialism. Although Marx and Engels wrote very little on socialism and neglected to provide any details on how it might be organized, numerous social scientists and neoclassical economists have used Marx's theory as a basis for developing their own models of socialist economic systems. The Marxist view of socialism served as a point of reference during the socialist calculation debate.

Marx himself did not use the term socialism to refer to this development. Instead, Marx called it a communist society that has not yet reached its higher-stage. The term socialism was popularized during the Russian Revolution by Vladimir Lenin. This view is consistent with and helped to inform early concepts of socialism in which the law of value no longer directs economic activity. Monetary relations in the form of exchange-value, profit, interest and wage labour would not operate and apply to Marxist socialism.

Mode of production

Karl Marx described a socialist society as such:

What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society – after the deductions have been made – exactly what he gives to it. What he has given to it is his individual quantum of labor. For example, the social working day consists of the sum of the individual hours of work; the individual labor time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labor (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labor cost. The same amount of labor which he has given to society in one form, he receives back in another.

Socialism is a post-commodity economic system and production is carried out to directly produce use-value rather than toward generating profit. The accumulation of capital is rendered insufficient in socialism as production is carried out independently of capital accumulation in a planned fashion. However, there have been other concepts of economic planning, including decentralised and participatory planning. One of Marx's main manuscripts is a posthumous work called Grundrisse, published in 1953. In this work, Marx's thinking is explored regarding production, consumption, distribution, social impact of capitalism. Communism is considered as a living model for humans after capitalism. The emphasis is upon fair distribution of goods, equality and the optimum environment for humans to live in to develop themselves to their best capabilities (art, politics and philosophy, among others) to achieve happiness and to satisfy intrinsic needs. Marx's goal was to design a social system that eliminates the differences in classes between the proletariat and the bourgeoisie. In doing so, the tension and the power differences which force workers to labor in bad conditions for poor wages, disappear. According to Marx, capitalism is a system guaranteed to collapse because big companies would buy small companies, leading to monopoly. In such a scenario, a very small number of people control most of the money and power. Poverty for the masses would prevail. Significant capital to buy products from the capitalist production system would be unavailable. Marx postulated that if workers are paid enough so that they still are able to buy products in a capitalist market, they will become essential contributors in assuring the domination of capitalism worldwide.

Market forces to compel capitalists to produce use-values in pursuit of exchange-value. Socialist production involves rational planning of use-values and coordination of investment decisions to attain economic goals. In this approach, cyclical fluctuations that occur in a capitalist market economy do not exist in a socialist economy. The value of a good in socialism is its physical utility rather than its embodied labour, cost of production and exchange value as in a capitalist system. Socialism makes use of incentive-based systems, so inequality would still exist, but diminishingly so since workers are worker-owners. In this way, inequality is also diminished and capital and power is more widely distributed. The method of compensation and reward in a socialist society would be based on an authentic meritocracy along the principle of "From each according to his ability, to each according to his contribution".

The advanced stage of socialism, referred to as the upper-stage communism in the Critique of the Gotha Programme, is based on the socialist mode of production. However, it is different from lower-stage socialism in fundamental ways. While socialism implies public ownership (by a proletarian semi-state apparatus) or cooperative ownership (by a worker cooperative enterprise), communism would be based on common ownership of the means of production. Class distinctions based on ownership of capital cease to exist, along with the need for a state. A superabundance of goods and services are made possible by automated production that allow for goods to be distributed based on need rather than merit.

Social relations

The fundamental goal of socialism from the view of Karl Marx and Friedrich Engels was the realization of human freedom and individual autonomy. Specifically, this refers to freedom from the alienation imposed upon individuals in the form of coercive social relations as well as material scarcity, whereby the individual is compelled to engage in activities merely to survive to reproduce his or herself. The aim of socialism is to provide an environment whereby individuals are free to express their genuine interests, creative freedom and desires unhindered by forms of social control that force individuals to work for a class of owners who expropriate and live off the surplus product.

As a set of social relations, socialism is defined by the degree to which economic activity in society is planned by the associated producers so that the surplus product produced by socialised assets is controlled by a majority of the population through democratic processes. The sale of labour power would be abolished so that every individual participates in running their institution as stakeholders or members with no one having coercive power over anyone else in a vertical social division of labour which is to be distinguished from a non-social, technical division of labour which would still exist in socialism. The incentive structure changes in a socialist society given the change in the social environment so that an individual labourers' work becomes increasingly autonomous and creative, creating a sense of responsibility for his or her institution as a stakeholder.

Role of the state

In Marxist theory, the state is "the institution of organised violence which is used by the ruling class of a country to maintain the conditions of its rule. Thus, it is only in a society which is divided between hostile social classes that the state exists". The state is seen as a mechanism dominated by the interests of the ruling class. It subjugates other classes, to protect and legitimize the existing economic system.

After a proletarian revolution, the state would initially become the instrument of the proletariat. Conquest of the state by the proletariat is a prerequisite to establishing a socialist system. As socialism is built, the role and scope of the state changes. Class distinctions, based on ownership of the means of production, gradually deteriorate. The concentration of means of production increasingly falls into state hands. Once all means of production become state property, the primary function of the state changes. Political rule via coercion over men diminishes through the creation and enforcement of laws, scientific administration and the direction of the processes of production. As a result, the state becomes an entity of economic coordination rather than a mechanism of class or political control and is no longer a state in the Marxian sense.

Chinese Dream

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Chinese_Dream 

 

The Chinese Dream (simplified Chinese: 中国梦; traditional Chinese: 中國夢; pinyin: Zhōngguó Mèng) is a term promoted by Xi Jinping since 2013 within Chinese society that describes a set of personal and national ethos and ideals in China. It is used by journalists, government officials, and activists to describe the role of the individual in Chinese society as well as the goals of the Chinese nation.

The phrase is closely associated with Xi Jinping, who is the General Secretary of the Communist Party of China (Paramount leader). Xi began promoting the phrase as a slogan in a high-profile visit to the National Museum of China in November 2012 after taking the office of general secretary. Since then, use of the phrase has become widespread in official announcements and the embodiment of the political ideology of the leadership under Xi Jinping. Xi said that young people should "dare to dream, work assiduously to fulfill the dreams and contribute to the revitalization of the nation". According to the party's theoretical journal Qiushi, the Chinese Dream is about Chinese prosperity, collective effort, socialism, and national glory. The relationship between the phrase and the American Dream has been debated.

History

Chinese literature

The phrase "Chinese Dream" (中国梦) corresponds with the associated idea of a collective hope for restoring China's lost national greatness and has ancient origins in Chinese literary and intellectual history. In the Classic of Poetry (Shi Jing), the poem "Flowing Spring" (下泉) describes a poet waking up in despair after dreaming of the former Western Zhou dynasty. During the troubled Southern Song dynasty, the poet Zheng Sixiao wrote a poem in which he coined the phrase "Heart full of [the] Chinese Dream (中国梦), the ancient poem 'Flowing Spring.'" Moreover, popular patriotic literary and theatrical works in early 20th century China also made reference to a "China Dream."

US literature

In 2008, architect Neville Mars, author Adrian Hornsby, and the Dynamic City Foundation published The Chinese Dream – a society under construction. The book investigates China's initial wave of rapid urbanization as it transitions to a socialist-market economy. Maps of the emerging spatial forms and analysis of the economic development processes that have originated within the extreme conditions of the 1980s and 1990s are combined with progressive planning concepts and personal portraits of a rapidly changing society. As such it synthesizes a body of research to tackle the main paradoxes at the heart of China's struggle for change and a more equitable and sustainable future.

According to Mars, "The present is so all-consuming that fast realities threaten to eclipse the slow dream of tomorrow." The overarching premise of the book is that China reveals a direct correlation between its shifting urban forms and its waning societal objectives. In that sense the book has arguably been prophetic. Written eight years ahead of the 12th FYP that holds the same thematic title "The Chinese Dream" (Chinese: 中国梦; pinyin: Zhōngguó Mèng) it introduces the notion that China's highly fragmented, sclerotic urban patterns determine a path of increasing inefficiency and energy-dependence. Mars introduces the term "MUD", or Market-driven Unintentional Development to describe this new hybrid urban condition, and suggests that planning itself needs to be radically redefined in order to be effective and not contribute to the extreme ex-urbanization. The conclusion of the book is "No New Cities" (杜绝新城), and a call for models of upgrading of existing urban centers and suburbs.

In 2010, author Helen H. Wang published her first book The Chinese Dream. The book is based on over 100 interviews of the new members of the middle class in China. In the book, Wang did not define the Chinese Dream; rather, she conveyed the hopes and dreams of the Chinese people through intimate portraits of this growing demographic.

The Chinese Dream has won Eric Hoffer Book Awards. In 2011, the book was translated into Chinese《中国梦》and published in China. In 2012, the second edition of The Chinese Dream with a foreword by Lord Wei was published. In the foreword, Wei wrote:

The Chinese Dream today as portrayed in Helen's book speaks of a changing China that is discovering consumerism, that is increasingly globalised, and also at a cross roads. Will her path in years to come continue to be one that resembles that of Western countries with all the benefits of further urbanization, wealth, and industrialization, but at the same time challenges in managing scarce resources, population migration, and the social problems that affluence can bring, elsewhere called 'Affluenza'? Or will the Chinese people themselves inside and outside China create a new sustainable Chinese Dream, based on their ancient values of respect for culture, family, and nature, harnessing technology and creativity?

In September 2012, Helen H. Wang gave a copy of her book The Chinese Dream to Tom Friedman at a dinner in Shanghai hosted by Peggy Liu, chairwoman of Joint US-China Collaboration on Clean Energy (JUCCCE).

The New York Times

Thomas Friedman's New York Times article has been credited with popularizing the phrase "Chinese Dream" in China.

The British publication The Economist credits a column written by the American journalist Thomas Friedman for popularizing the term in China. A translation of Friedman's article, "China Needs Its Own Dream", published in The New York Times (October 2012) was widely popular in China. Friedman attributes the phrase to Peggy Liu, the founder of the environmentalist NGO JUCCCE. According to Friedman in the magazine Foreign Policy, "I only deserve part credit... the concept of 'China Dream' was created by my friend Peggy Liu, as the motto for her NGO about how to introduce Chinese to the concept of sustainability."

James Fallows of The Atlantic has pointed out that the phrase has frequently been used in the past by journalists. He mentions Deborah Fallow's book Dreaming in Chinese, his own article "What Is the Chinese Dream?", and Gerald Lemos' book The End of the Chinese Dream as examples. In response to Fallows, The Economist cites an article in the Xinhua Daily Telegraph that directly credits Friedman.

"Will the next Chinese leader have a dream that is different from the American dream?" [a paraphrase of a line in Mr Friedman's column]. In a year of political transition, the world's gaze is focused on the east. On the eve of the 18th [Communist Party] congress [at which Mr Xi had been appointed as party chief two weeks earlier] the American columnist Thomas Friedman wrote an article devoted to analysis of the "Chinese dream" titled "China Needs Its Own Dream". It expressed the hope that [the dream would be one that] "marries people's expectations of prosperity with a more sustainable China". Suddenly the "Chinese dream" became a hot topic among commentators at home and abroad.

— Xinhua Daily Telegraph

The Economist writes that references to Friedman's article have also appeared in other Chinese media outlets, including a translation in The References News, in an article written for China's State Council Information Office, on the cover of the magazine Oriental Outlook as the main caption, in a magazine article published by Frontline, and in an article for a local newspaper written by China's ambassador to Romania, Huo Yuzhen. In the preface of the Oriental Outlook "Chinese Dream" issue, the editor states that "the 18th national congress of the Chinese Communist Party convened November 8th. "Does the next generation of Chinese leaders have a 'Chinese Dream' that is different from the "American Dream"?.... This was a question raised by one of America's most influential media figures, Thomas Friedman."

Xi Jinping

Xi Jinping, Chinese leader, adopted "Chinese Dream" as a slogan in 2013.

 

Just after becoming General Secretary of the Communist Party of China in late 2012, Xi announced what would become the hallmark of his administration. "The Chinese Dream," he said, is "the great rejuvenation of the Chinese nation." Xi's Chinese Dream is described as achieving the Two Centenaries: the material goal of China becoming a "moderately well-off society" by 2021, the 100th anniversary of the Chinese Communist Party, and the modernization goal of China becoming a fully developed nation by about 2049, the 100th anniversary of the founding of the People's Republic.

In May 2013, Xi Jinping called upon young people "to dare to dream, work assiduously to fulfill the dreams and contribute to the revitalization of the nation". He called upon all levels of the Party and the government to facilitate favorable conditions for their career development. Xi told young people to "cherish the glorious youth, strive with pioneer spirit and contribute their wisdom and energy to the realization of the Chinese dream".

According to Robert Lawrence Kuhn, who is an international investment banker and the author of "How China's Leaders Think: The Inside Story of China's Reform and What This Means for the Future", the Chinese Dream has four parts: Strong China (economically, politically, diplomatically, scientifically, militarily); Civilized China (equity and fairness, rich culture, high morals); Harmonious China (amity among social classes); Beautiful China (healthy environment, low pollution). Khun states that "a moderately well-off society" is where all citizens, rural and urban, enjoy high standards of living. This includes doubling the 2010 G.D.P. per capita (approaching $10,000 per person) by about 2020 and completing urbanization (roughly one billion people, 70 percent of China's population) by about 2030. "Modernization" means China regaining its position as a world leader in science and technology as well as in economics and business; the resurgence of Chinese civilization, culture and military might; and China participating actively in all areas of human endeavor.

Reporters have noted that, "Mr Xi had seen the American dream up close, having spent a couple of weeks in 1985 with a rural family in Iowa. (He revisited them during a trip to America last year as leader-in-waiting.)"

The concept of Chinese Dream is very similar to the idea of the "American Dream". It stresses the importance of entrepreneurial spirit. It also glorifies a generation of self-made men and women in post-reform China such as those rural immigrants who moved to the urban centers and achieved magnificent improvement in terms of their living standards and social life. Chinese Dream can be interpreted as the collective consciousness of Chinese people during the era of social transformation and economic progress. 

As an aspect of political thought in contemporary China, the emergence of Chinese Dream indicates a diversion of political ideology from egalitarianism to a relatively more libertarian individualist approach. It is worth noting that the concept is still based on collectivism rather than individualism for it sees the subject of Chinese Dream as the people of China as a whole instead of specific individuals. 

The idea was put forward by the new CPC general secretary Xi Jinping on 29 November 2012 and repeated by him on numerous important occasions. The Communist Party's propaganda chief, Liu Yunshan, has directed that the concept of the Chinese dream be incorporated into school textbooks.

In an article for the Huffington Post, French sinologist David Gosset (高大伟) presented the idea that the Liyuan Style is an illustration of the China Dream. China's new First Lady Peng Liyuan is at the intersection of what Gosset calls "Modern China", "Civilizational China" and "Global China".

Huang Yongjun, the general manager of New Classic Press (UK)

Huang Yongjun, the founder and general manager of New Classic Press (UK) is a major advocator of the "China Dream" in the United Kingdom. The New Classic Press is an effort to "explain China to the world" by Huang.

Interpretation

"Chinese Dream" in the South Lake Park, Panzhou, Guizhou, China, on 1 November 2019.

 

The Chinese Dream is vaguely defined, and has led to multiple interpretations describing the phrase's meaning.

Compared to the American Dream

Author Helen H. Wang was one of the first to connect the Chinese Dream with the American Dream. In her book The Chinese Dream, Wang wrote: "The Chinese Dream, taking its title from the American Dream, alluding to an easily identifiable concept..." Wang attempts to demonstrate that the Chinese people have similar dreams as those of the American people. "This new [Chinese] middle class," Wang wrote, "which barely existed a decade ago, will reach the size of more than two Americas in a decade or two. They number in the hundreds of millions, with the same hopes and dreams that you and I have: to have a better life, to give our children an even better life...". Wang has also claimed that "Chinese people must define their own dream".

Sustainable development

The China Dream has been defined as sustainable development. Peggy Liu and the NGO JUCCCE coined the phrase "China Dream" as a movement based on sustainability, which was later popularized in China through a New York Times article and adopted by Xi Jinping. Pollution and food safety are popular concerns in China. Cities are frequently covered by smog and the country's rivers are polluted with industrial waste. China's rising middle class is expected to increase by 500 million people by 2025 and will continue to put a strain on the country's dwindling resources. According to Liu, the Chinese Dream of sustainability can be achieved through the promotion of green technologies and the reduction of widespread conspicuous consumption. The Chinese Dream is a dream of a prosperous lifestyle reconciled with a sustainable lifestyle.

National renewal

The Chinese Dream has been viewed as a call for China's rising international influence. Xi Jinping refers to the dream as a form of national rejuvenation. Young Chinese are envious of America's cultural influence and hope that China could one day rival the US as a cultural exporter. Members of Chinese military support China's military development, opining that the "strong-nation dream of a great revival of the Chinese people" can only result from a "strong-army dream". Former United States Secretary of State John Kerry has promoted the idea of a "Pacific Dream" to accommodate China's rise through regional collaboration over shared interests like the environment and economic growth.

Individual dreams

Many Chinese have interpreted the Chinese dream as the pursuit of individual dreams. Evan Osnos of The New Yorker concludes that "Xi Jinping has sought to inspire his people by raising the flag of the China Dream, but they have interpreted it as China Dreams—plural." The Chinese Dream is defined according to an individual's personal aspirations and desires, which may lead to "the proliferation of 1.3 billion China Dreams." Sujian Guo and Baogang Guo argue, "To a great extent, the American dream has been exported to China and has become the Chinese dream." But according to official party journal Qiushi, the Chinese Dream is not about individual glory, but about collective effort. Measuring public sentiment on Sina Weibo, Christopher Marquis and Zoe Yang of CivilChina.org found that the Chinese Dream refers more to the common goods bestowed by civil society than it does to individual achievements. A main aim of the Chinese state propaganda is therefore the construction of links between individual and national aspirations, which also signifies the convergence of the values of the market economy and state nationalism. This is evident in Chinese entertainment television. In a genre of reality shows in public speaking, for example, contestants frequently connect between their "dreams" and the triumph of China and further emphasize the legitimacy of the Chinese Communist Party in delivering a better future.

Economic and political reform

Some government officials and activists view the Chinese Dream as a need for economic and political reform. Sustaining China's economic growth requires economic reform encompassing urbanization, the reduction of government bureaucracy, and weakening the power of special interests. Chinese liberals have defined the Chinese Dream as a dream of constitutionalism. Southern Weekly, a liberal newspaper based in Guangzhou, attempted to publish an editorial titled "The Chinese dream: a dream of constitutionalism" which advocated the separation of powers, but was censored by the authorities. Both Xi Jinping and Premier Li Keqiang support economic reform, but have shied away from discussing political reform. Premier Li has said that "But however deep the water may be, we will wade into the water. This is because we have no alternative. Reform concerns the destiny of our country and the future of our nation." According to official party sources, the Chinese Dream is the "essence of Socialism with Chinese characteristics".

In October 2013, Britain's Chancellor of the Exchequer, George Osborne, described the Chinese Dream as a political reform that includes "rebalancing from investment to consumption".

Socialism with Chinese characteristics

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Socialism_with_Chinese_characteristics

Socialism with Chinese characteristics
Simplified Chinese	中国特色社会主义
Traditional Chinese	中國特色社會主義

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The theoretical system of socialism with Chinese characteristics (Chinese: 中国特色社会主义; pinyin: Zhōngguó tèsè shèhuìzhǔyì) is a broad term for political theories and policies that are seen by their proponents as representing Marxism–Leninism adapted to Chinese circumstances and specific time periods. For instance, in this view Xi Jinping Thought is considered to represent Marxist–Leninist policies suited for China's present condition while Deng Xiaoping Theory was considered relevant for the period when it was formulated.

The term entered common usage during the era of Deng Xiaoping and was largely associated with Deng's overall program of adopting elements of market economics as a means to foster growth using foreign investment and to increase productivity (especially in the countryside where 80% of China's population lived) while the Communist Party of China retained both its formal commitment to achieve communism and its monopoly on political power. In the party's official narrative, socialism with Chinese characteristics is Marxism–Leninism adapted to Chinese conditions and a product of scientific socialism. The theory stipulated that China was in the primary stage of socialism due to its relatively low level of material wealth and needed to engage in economic growth before it pursued a more egalitarian form of socialism, which in turn would lead to a communist society described in Marxist orthodoxy.

Primary stage of socialism

During Mao Zedong era

The concept of a primary stage of socialism was conceived before China introduced economic reforms. In the early 1950s, economists Yu Guangyuan, Xue Muqiao and Sun Yefang raised the question of socialist transformation in which China's economy of low productive force was in a transitional period, a position which Mao Zedong endorsed briefly until 1957. When discussing the necessity of commodity relations at the 1st Zhengzhou Conference (2–10 November 1958), for example, Mao—the Chairman of the Communist Party of China's Central Committee—said that China was in the "initial stage of socialism". However, Mao never elaborated on the idea and his successors were left to do this.

After Mao Zedong's death

On 5 May 1978, the article "Putting into Effect the Socialist Principle of Distribution According to Work" (贯彻执行按劳分配的社会主义原则) elaborated on the idea that China was still at the first stage of reaching pure communism and that it had not become a truly socialist society. The article was written by members in the State Council's Political Research Office led by economist Yu Guangyuan on the orders of Deng Xiaoping so as to "criticize and repudiate" the beliefs of the communist left. After reading it, Deng himself authored a brief memo saying that it was "well-written, and shows that the nature of distribution by labor is not capitalist, but socialist [...] [and] to implement this principle, many things are to be done, and many institutions to be revived. In all, this is to give incentives for us to do better". The term reappeared at the 6th plenum of the 11th Central Committee on 27 June 1981 in the document "Resolution on Certain Questions in the History of our Party since the Founding of the PRC". Hu Yaobang, the General Secretary of the Communist Party of China, used the term in his report to the 12th National Congress on 1 September 1982. It was not until the "Resolution Concerning the Guiding Principle in Building Socialist Spiritual Civilization" at the 6th plenum of the 12th Central Committee that the term was used in the defense of the economic reforms which were being introduced.

At the 13th National Congress, acting General Secretary Zhao Ziyang on behalf of the 12th Central Committee delivered the report "Advance Along the Road of Socialism with Chinese characteristics". He wrote that China was a socialist society, but that socialism in China was in its primary stage, a Chinese peculiarity which was due to the undeveloped state of the country's productive forces. During this phase of development, Zhao recommended introducing a planned commodity economy on the basis of public ownership. The main failure of the communist right according to Zhao was that they failed to acknowledge that China could reach socialism by bypassing capitalism. The main failure of the communist left was that they held the "utopian position" that China could bypass the primary stage of socialism in which the productive forces are to be modernized.

On 5 October 1987, Yu Guangyuan, a major author of the concept, published an article entitled "Economy in the Initial Stage of Socialism" and speculated that this historical stage will last for two decades and perhaps much longer. This represents, says Ian Wilson, "a severe blight on the expectations raised during the early 70s, when the old eight-grade wage scale was being compressed to only three levels and a more even distributive system was assumed to be an important national goal". On 25 October, Zhao further expounded on the concept of the primary stage of socialism and said that the party line was to follow "One Center, Two Basic Points"—the central focus of the Chinese state was economic development, but that this should occur simultaneously through centralized political control (i.e. the Four Cardinal Principles) and upholding the policy of reform and opening up.

General Secretary Jiang Zemin further elaborated on the concept ten years later, first during a speech to the Central Party School on 29 May 1997 and again in his report to the 15th National Congress on 12 September. According to Jiang, the 3rd plenum of the 11th Central Committee correctly analyzed and formulated a scientifically correct program for the problems facing China and socialism. In Jiang's words, the primary stage of socialism was an "undeveloped stage". The fundamental task of socialism is to develop the productive forces, therefore the main aim during the primary stage should be the further development of the national productive forces. The primary contradiction in Chinese society during the primary stage of socialism is "the growing material and cultural needs of the people and the backwardness of production". This contradiction will remain until China has completed the process of primary stage of socialism—and because of it—economic development should remain the party's main focus during this stage.

Jiang elaborated on three points to develop the primary stage of socialism. The first—to develop a socialist economy with Chinese characteristics—meant developing the economy by emancipating and modernizing the forces of production while developing a market economy. The second—building socialist politics with Chinese characteristics—meant "managing state affairs according to the law", developing socialist democracy under the party and making the "people the masters of the country". The third point—building socialist culture with Chinese characteristics—meant turning Marxism into the guide to train the people so as to give them "high ideals, moral integrity, a good education, and a strong sense of discipline, and developing a national scientific, and popular socialist culture geared to the needs of modernization, of the world, and of the future".

When asked how long the primary stage of socialism would last, Zhao replied "[i]t will be at least 100 years [...] [before] socialist modernization will have been in the main accomplished". The state constitution states that "China will be in the primary stage of socialism for a long time to come". As with Zhao, Jiang believed that it would take at least 100 years to reach a more advanced stage.

Socialist market economy

What is socialism and what is Marxism? We were not quite clear about this in the past. Marxism attaches utmost importance to developing the productive forces. We have said that socialism is the primary stage of communism and that at the advanced stage the principle of from each according to his ability and to each according to his needs will be applied. This calls for highly developed productive forces and an overwhelming abundance of material wealth. Therefore, the fundamental task for the socialist stage is to develop the productive forces. The superiority of the socialist system is demonstrated, in the final analysis, by faster and greater development of those forces than under the capitalist system. As they develop, the people's material and cultural life will constantly improve. One of our shortcomings after the founding of the People's Republic was that we didn't pay enough attention to developing the productive forces. Socialism means eliminating poverty. Pauperism is not socialism, still less communism.

— Deng Xiaoping, speech discussing Marxist theory at a Central Committee plenum, 30 June 1984

Deng Xiaoping, the architect of the Chinese economic reforms, did not believe that the market economy was synonymous with capitalism or that planning was synonymous with socialism.^[16] During his southern tour, he said that "planning and market forces are not the essential difference between socialism and capitalism. A planned economy is not the definition of socialism, because there is planning under capitalism; the market economy happens under socialism, too. Planning and market forces are both ways of controlling economic activity".

Ideological justification

In the 1980s, it became evident to Chinese economists that the Marxist theory of the law of value—understood as the expression of the labor theory of value—could not serve as the basis of China's pricing system.^[17] They concluded that Marx never intended his theory of law of value to work "as an expression of 'concretized labor time'".^[17] Marx's notion of "prices of production" was meaningless to the Soviet-styled planned economies since price formations were according to Marx established by markets. Soviet planners had used the law of value as a basis to rationalize prices in the planned economy. According to Soviet sources, prices were "planned with an eye to the [...] basic requirements of the law of value". However, the primary fault with the Soviet interpretation was that they tried to calibrate prices without a competitive market since according to Marx competitive markets allowed for an equilibrium of profit rates which led to an increase in the prices of production. The rejection of the Soviet interpretation of the law of value led to the acceptance of the idea that China was still in the primary stage of socialism. The basic argument was that conditions envisaged by Marx for reaching the socialist stage of development did not yet exist in China.

Mao said that the imposition of "progressive relations of production" would revolutionize production. His successor's rejection of this view according to A. James Gregor has thwarted the ideological continuity of Maoism—officially Mao Zedong Thought. Classical Marxism had argued that a socialist revolution would only take place in advanced capitalist societies and its success would signal the transition from a capitalist commodity-based economy to a "product economy" in which goods would be distributed for people's need and not for profit. If because of a lack of a coherent explanation in the chance of failure this revolution did not occur, the revolutionaries would be forced to take over the responsibilities of the bourgeoisie. Chinese communists are thus looking for a new Marxist theory of development. Party theorist Luo Rongqu recognized that the founders of Marxism had never "formulated any systematic theory on the development of the non-Western world" and said that the Communist Party of China should "establish their own synthesized theoretical framework to study the problem of modern development". According to A. James Gregor, the implication of this stance is that "Chinese Marxism is currently in a state of profound theoretical discontinuity".

Private ownership

The concept of private ownership is rooted in classical Marxism. Since China adopted socialism when it was a semi-feudal and semi-colonial country, it is in the primary stage of socialism, because of this, certain policies and system characteristics—such as commodity production for the market, the existence of a private sector and the reliance of the profit motive in enterprise management—were changed. These changes were allowed as long as they improve productivity and modernize the means of production and thus further develop socialism.

The Communist Party of China still considers private ownership to be non-socialist. However, according to party theorists the existence and growth of private ownership does not necessarily undermine socialism and promote capitalism in China. It is argued that Karl Marx and Friedrich Engels never proposed the immediate abolishment of private ownership. According to Engel's book Principles of Communism, the proletariat can only abolish private ownership when the necessary conditions have been met. In the phase before the abolishment of private ownership, Engels proposed progressive taxation, high inheritance taxes and compulsory bond purchases to restrict private property while using the competitive powers of state-owned enterprises to expand the public sector. Marx and Engels proposed similar measures in The Communist Manifesto in regards to advanced countries, but since China was economically undeveloped party theorists called for flexibility regarding the party's handling of private property. According to party theorist Liu Shuiyuan, the New Economic Policy program initiated by Soviet authorities in the aftermath of the war communism program is a good example of flexibility by socialist authorities.

Party theorist Li Xuai said that private ownership inevitably involves capitalist exploitation. However, Li regards private property and exploitation as necessary in the primary stage of socialism, claiming that capitalism in its primary stage uses remnants of the old society to build itself. Sun Liancheng and Lin Huiyong said that Marx and Engels—in their interpretation of The Communist Manifesto—criticized private ownership when it was owned solely by the bourgeoisie, but not individual ownership in which everyone owns the means of production and hence cannot be exploited by others. Individual ownership is considered consistent with socialism since Marx wrote that post-capitalist society would entail the rebuilding of "associated social individual ownership".