China and the Crisis of Crisis Theory
By Heiko Khoo
SolidarityEconomy.net via China.org.cn
April 14, 2014 - The recent BBC documentary called "How China Fooled the World" presented by Robert Preston claims that China's economy is about to collapse. The program starts well: correctly showing that China's state-owned enterprises dominate the economy and shape its development. However, it fails to adequately consider the advantages of this system of public ownership.
China's problems were presented as a mirror of those that paralysed Western capitalism in 2008. The world financial crisis is said to have caused the Chinese government to embark on an unsustainable, credit fuelled, investment orgy. This generated a colossal property bubble that is now about to burst. This theory corresponds to Western hopes and assumptions that the structure of China's economic system cannot be responsible for its success. Only private ownership and capitalism can produce success. China temporarily "fooled the world" but now comes the crash.
This is a lesson that developing countries in particular are expected to memorize by heart. Indeed, the entire future of imperialist dominance of the world depends on it. For if other developing counties take the commanding heights of their economies into public hands and embark on development like that in China, their subordination to European, North American and Japanese economic imperialism will surely come to an end.
Since 1989 capitalist strategists, advisors and experts got it wrong about China again and again. For example, the unfortunate professor Gordon Chang wrote "The Coming Collapse of China" in 2001: 13 years later he is still waiting. Some Western Marxists like Alan Woods think China is dominated by capitalism and claim that the world economic crisis was caused by a "crisis of overproduction," i.e. that workers aren't paid enough to buy back what they make. Woods predicted that China's economy would collapse in 2007. Seven years later, China's economy has grown by 67.7 percent.
The prolific Marxist economic blogger Michael Roberts explained in this column in January 2010, that the global economic crisis was caused by the tendency for the rate of profit to fall. This occurs because private companies seek to maximize profits, and competition compels them to increase the proportion of their total investment spent on machinery and equipment (which Marx called dead labour) vis-à-vis human labor power (which Marx called living labor). As human labor power is the only commodity that produces new value, and as the proportion of dead labor in total investment increases over the long-term, the rate of profit inevitably tends to decline. This process is an inexorable law under capitalism.(more...)