Observations of a French Statesman on State-Private Enterprises in 1950s China
Top: Detail of ‘The History of Labour’ by Maureen Scott (b1940); at People’s History Museum UK (See also “Theses on Socialist Art” Alliance ML)
April 13, 2025
On 28 March 2025, we re-published a report on ‘Mao on Dialectics versus Stalin on Dialectics’ – that was an edited text from an issue of ‘Red Front,’ September 1977. This is at MLRG.online 28 March 2025.
A version of that original ‘Red Front’ issue as we explained can be found at Marxist Internet Archive (September 1977 Red Front). However its form renders it difficult to read. We therefore provided a re-formatted and also edited transcript (Again – see On the ‘Dialectics’ of Mao).
The primary content of the whole issue was “Mao Tse-tung Thought” and Mao’s theory of contradictions.
In this current article, we show the short Appendix (Originally this was numbered as Appendix Two). This had discussed the mask of socialism that the People’s Republic China (PRC) adopted under Mao’s direction. This mask took the form of Joint State-Private Boards. At a later stage these are often termed State Owned Enterprises. Discussions on the People’s Republic of China often invoke the mistaken notion of it having initially established ‘socialism’ – which is incorrect. The current discussions that rage over whether the People’s Republic of China is currently ‘still socialist’ – miss this point.
The short appendix notes the observations of a bourgeois French statesman – Edgar Faure (Wikipedia). Over several visits to China in the 1950s, he “held many conversations with leading members of the “new democratic” government, and especially with Chinese businessmen, on the nature of the economic system in “New China”.
His observations were originally published in his book, “The Serpent and the Tortoise”, published in 1958.
In this Appendix from the 1977 ‘Red Front’ – we again will note that there was an error in the report 1968 – of the exposure of Mao as originally written by Bland. This was to mis-label “the developing Marxist-Leninist leadership headed by Liu Shao-chi and Peng Chen”. This was fully corrected by Bland in his 1997 version (see below).
As was the practice of the MLOB, none of the individual pieces are signed by an individual – but are from the collective authorship of the MLOB leading cadre. However we note that in our view, this piece bears some hallmarks of a Bland style.
W.B.Bland’s exposure of Mao Tse-tung (in Wade-Giles or Pinyin Mao Zedong), from the 1997 second version – has been published by MLRG.online (Erythros Press and Amazon). We will shortly also publish a Companion Volume 1A of “Selected Works of W.B.Bland,” which will contain ancillary materials on the exposure of Mao Zedong.
APPENDIX TWO – A CYNICAL CAPITALIST IN CHINA
Edgar Faure was a French statesman who, during his various visits to China in the 1950s, held many conversations with leading members of the “new democratic” government, and especially with Chinese businessmen, on the nature of the economic system in “New China”. In his book, “The Serpent and the Tortoise”, published in 1958, he describes the system of “mixed enterprises”, i.e., the joint state-private boards, in which at that time an estimated 700,000 capitalists were involved. As was quoted in the “Report of the Central Committee of the MLOB on the Situation in the People’s Republic of China”, the system received the wholehearted support of China’s capitalists, since, apart from guaranteeing them a gilt-edged 5 per cent profit, it ensured better conditions in respect both of capital accumulation and conditions for
intensifying the exploitation of labour-power (increase of relative surplus value) than had been the case under the old system dominated by bureaucrat-comprador capital.
Considered from the fundamental viewpoint of the historical development of the capitalist mode of production as a whole, the state-capitalist system of joint state-private boards, based on a 50 per cent (in some cases a 35 per cent to 65 per cent) sharing of capital ownership between private capital and the state, rests upon two important needs of a developing capitalist system in a country only recently emerged from colonial enslavement into national independence and requiring to carry through capital accumulation in the conditions of intense restriction of market and investment arenas exercised by the powerful developed imperialist groups. These two basic needs are:
1) the need to create a common or co-operative pool of investment capital as a lever compelling the capitalist class as a unified whole to “exercise thrift” and to plough back the bulk of profits realised in any one investment cycle into further investment – i.e., to carry through primitive accumulation. The risks and perils associated with the emergence as an independent capitalist-type nation of a large colonial-type country such as China in the epoch of advanced imperialism are too great and hazardous to permit the question of re-investment and accumulation to be left to the individual “thriftiness” and “conscience” of each individual industrial capitalist, as was the case during the period of “laissez faire” capitalism in Europe in the 19th century. Under ”new democracy”, wastrels, profligates or even the odd unfortunate capitalist “with no head for business” are not simply frowned upon; the very social and economic conditions for their existence are taken away, and all without exception must participate in that highest of all moral duties in the service of capital: the duty to accumulate;
2) the need to dispose of a disciplinary force over labour which is intrinsically more compelling and persuasive than the mere threat of victimisation and unemployment – measures which, apart from being economically wasteful are not, in the era of the October Revolution and the (then valid) construction of socialism in the USSR, acceptable to the working class and working people themselves.
As regards the first of these two needs, the system of 50 per cent capital sharing between the state and private interests, as anchored organisationally in the joint state-private boards, takes the burdensome responsibility for planning future investment and reinvestment policy – i.e., measures to ensure that the reproduction of
capital on an extended scale can continue – out of the hands of the individual capitalist and vests it in the state. That is to say, it establishes a joint investment fund.
As regards the question of “labour discipline” and the overall conditions under which exploitation and the production of surplus-value are to take place, the need of the Chinese national capitalist class was for a total system of ideological and political manipulation and control under which the worker can be conditioned into
believing that the system of joint state-private boards is socialism based on common ownership by the whole working people of the means of production, distribution and exchange. This bears a certain kinship with the traditional methods of reformist deception in developed capitalist countries such as Britain, where working people are misled by Labour and Tory parties alike into believing that socialism is commensurate with capitalist nationalisation. In this way, a euphoric smokescreen of “labour enthusiasm” is whipped up, behind which the national capitalist – that mysterious figure who, like those of his class the world over, is so skilled in
adopting the most disarming and engaging of disguises: the benign reformer, the “progressive” innovator of “advanced techniques”, and so on – anything, in fact, but an exploiter of human brain and tissue – is drowned out and loses his class identity behind the paeans of praise to the glory of “new democratic” China and its
Great Architect, Chairman Mao:
“Great is the national bourgeoisie! It has accepted the peaceful reforms offered by the Communist Party and Chairman Mao. Great are the achievements of its reformation! … To reform industry and commerce peacefully is the creative development of Marxism-Leninism in China.”
(Kwang Ming Daily, May 9th, 1954).
We see, then, that as far as its place in the overall development of the capitalist system on a world scale at the present historical juncture is concerned, the growth of bureaucratic state-capitalism in China is fully in line with similar developments in the camp of Soviet neo-imperialism and, indeed, with measures taken over recent years in the long-established countries of state monopoly-capitalism towards the development of corporate forms of state control of the economy.
To return, however, to our visiting representative in China of the developed monopoly-capitalist countries, it was in respect of the latter of the two aspects of the Chinese state-capitalist system, that of labour discipline, that Edgar Faure had the most revealing information to impart. He reported on the system of dual
directorships, in which an enterprise would be effectively managed by two directors, one a representative of the private capitalist interest, who in practice holds what amounts to a sinecure; the other a nominee of the “new democratic” state. Of these two, it was the latter who was the senior director in the management of the enterprise, and it was under his purview that the all-important sphere of labour relations was planned and controlled.
In short, the state assumes responsibility for labour relations and labour discipline – a task it is better qualified to fulfil since it is allegedly a socialist state in which the workers and poor peasants allegedly hold power.
Miners in Britain will recall the attempt to adopt a similar tactic towards themselves when the mines were nationalised by the first post-war Labour Government in\ 1947. On that occasion, they were told that there would be no room for industrial disputes in the new “socialist” mining industry which had been set up with a single stroke of the parliamentary pen, since the miners themselves now had a share in the control of that industry through nationalisation. The sound class sense of the miners enabled them to laugh this flight of capitalist fancy out of court. In the social and class conditions of “new democratic” China, however, a younger and less experienced proletariat was, for a time, unable to distinguish between state capitalism and socialism – largely because of its boundless yet immature enthusiasm for the latter. Here is how Edgar Faure describes the way in which the state-capitalist system in “new democratic” China operates as far as that vexed question of “labour relations” is concerned:
“The ‘public’ director… can control the owner, but he also controls the work of the workers. He maintains the discipline which, in the previous period, was usually slack… He is there to make the workers understand that the enterprise belongs to the state and that they must refrain from sabotage or fancies, which the feeling of working in an insufficiently socialist manner might earlier have excused.”
“All the capitalists whom I asked declared themselves satisfied and put such hyperbole into their professions of faith that most people would have seen in then either the effects of constraint or of remarkable irony… It may doubtless seem astonishing that the grace of Marxist ideology has simultaneously descended upon all the dispossessed financial elite.
With the dulled understanding of a bourgeois idealist, I have always hitherto
rejected this explanation…
“the question is no longer: why is the capitalist satisfied? but, why shouldn’t
the capitalist be relatively satisfied?…
“The capitalist industrialist or merchant is therefore relatively at an advantage with his 35 percent, which he is free to deal with as he wishes…
This same capitalist has, on the other hand, often bitter memories of the pre-communist period, which was accompanied by inflations and difficulties of every kind…
Finally, he has already passed through the experience of two successive
stages, that of limitation and that of transformation and, in the majority
of cases, the more socialist stage has proved the more favourable to him”.
(Edgar Faure: “The Serpent and the Tortoise”; Macmillan, 1958; pp. 172-174).
He goes on to quote from private capitalist directors themselves:
“Since socialisation, the workers work with enthusiasm… In the period before socialisation the workers had become insupportable.”…
“Since socialism we have had a planned economy. Production is improving”.
(Ibid; p.175).
He concludes:
“We experience a certain surprise in visiting the school for capitalists and noting that, after some months, all the pupils without exception are convinced of the excellence of the regime.”
(Ibid; p. 175).
The inescapable conclusion to which we are driven, willy-nilly, by the above observations and reports, is that, in so describing the system of joint ownership between private capital and the state, together with its concomitant, the system of dual directorships – Edgar Faure was right in his cynical suspicion
that the system he was observing and describing with such accurate perspicacity was not socialism, but a form of capitalism. As we have seen, it is a form imposed by the complex and compelling necessities dictated by the objective conditions attending the construction of a capitalist system in a large, economically underdeveloped
country, the growth of which into a viable, organic capitalist whole was, until comparatively recent times, restricted and held back by colonial suppression and super-exploitation.
As for the class which exercises real authority and power in “new democratic” China, it – or at least the more independent and spirited of its representatives – have on occasion felt sufficiently emboldened by the liberal freedoms accorded them by “The Thought of Mao Tse-tung” as to express their real views on such questions as political economy and the relevance of “Marxism-Leninism” – i.e., “The Thought of Mao Tse-tung” – to “the concrete conditions prevailing in China”:
“The Communist Party has treated the national bourgeoisie according to the theories of Marxism-Leninism (would that it had! -Ed.). It should be noted that most of the works of Marxist-Leninist theory were written a long time ago. In many cases, application of these theories in China is quite inappropriate.” “For instance, it has been asserted in political economy classes that when an independent worker turns into an exploiter, he will quickly spend all his original capital and depend on the labour of others for his income. This theory does not apply to the Chinese national bourgeoisie. We are diligent workers who spend less than we earn…”
(New China News Agency, June 16th, 1958).
Apart from the obvious nonsense contained in this passage, the first thing to engage the attention of the reader is, not merely the boundless contempt shown for the working class as the producers of all social wealth – this, after all, is a typical characteristic of the class the world over, and should occasion no surprise – but the utter disdain which is so clearly and frankly expressed for “Marxism-Leninism” – which, “in the concrete conditions of China”, means the revisionist “Thought of Mao Tse-tung”. This gives the lie in the most effective and telling way possible to any attempt to ascribe to the working class the “leading role” in the “bloc of revolutionary classes” allegedly exercising “joint dictatorship” within the system of “people’s democratic dictatorship”.
After all, it is not difficult to imagine what the outcome would have been had the boot been on the other foot – i.e., the fate that would have befallen any representative of the advanced strata of the industrial proletariat of China had he dared – except perhaps during the brief period in which the leadership and control of the CPC was in the hands of the developing Marxist-Leninist leadership headed by Liu Shao-chi and Peng Chen – to have expressed in published form his real class views concerning the entire revisionist ideology of “new democracy” and its perspective of the Chinese national capitalist class growing peacefully, willingly and non-antagonistically into socialism! Unlike the case quoted above of the published point of view of a representative of his class enemy, the national capitalist class, the full power of the “new democratic” state would, in that eventuality, have been used to prevent those views from ever seeing the light of day in their printed and published form!
For is not the example we have given – an admittedly fictitious one – in fact exactly analogous, even though on a vastly greater ,scale, with the steps taken after April 1965 by the Liu Shao-chi – Peng Chen leadership, representing China’s revolutionary proletariat, to expel the representatives of the national capitalist class from the “new democratic” state and so to carry through at long last the socialist revolution which the revisionist “Thought of Mao Tse-tung” had for so long prevented? And, conversely, were not the counter-revolutionary measures adopted by the Mao faction from May 1966 onwards exactly analogous, though again on a far greater scale, with the fate that would have befallen our imaginary representative of the revolutionary proletariat of China had he dared to strike out against the dictatorship of the national capitalist class at the time when that dictatorship was disguised behind the ideological smokescreen of “people’s democratic dictatorship” and its theoretical justification, “The Thought of Mao Tse-tung”?
As we have seen, those counter-revolutionary measures were concerned precisely with destroying the limited freedoms and socio-political controls available to the working class, working people and poor peasantry under “new democracy”, and with vastly extending and deepening those available to the national capitalist class. This is the history of revolution and counter-revolution in China which confirms as correct the initial hazy suspicions of our cynical capitalist in China.
