Further Notes from a Christian-Marxist dialogue-dialectic
Hugh Williams
Further Notes from a Christian-Marxist dialogue-dialectic:
John and Pierre’s good AIRR (2023) text tries to lay out the continuing relevance of Lonergan’s philosophical-theological and economic theory work (GEM-FS) to the world in its present state. I’ve been insisting that Christian thinkers have things to learn from Marxist thinkers as do Marxists from Christian thinkers especially one such as Lonergan. There is however, perhaps, an understandable onesidedness in the AIRR text in that it mostly emphasizes the limitations in Marxism and what it can learn from Lonergan. This note attempts to indicate how the learning can, and should, go the other way at times. Now, perhaps is a time, especially as this absurd US presidency leads the empire deeper into a ‘cold war’ with China.
(Do not underestimate how this real and extremely dangerous threat of a renewed military conflict with Iran fits into a long-term strategy against China. (See from almost twenty years ago - Samir Amin's, “Political Islam”, Monthly Review, December 2007))
These notes attempt to give some degree of political-economic context for this tragic geo-political dialectic and its class dimensions.
In their text at AIRR pp 88-89 Raymaker and Whalon give an informative but brief account of the economic policy transition from mercantilism to liberalism that was followed by the intensive Marxist critique of this liberalism. Adam Smith was seen as a liberal advocating in the interest of liberal freedom for popular democratic control of government. At the time this was a radically progressive idea that intended the inauguration of market capitalism to replace mercantilism. However, what was not anticipated was how business wealth eventually would concentrate in business entities that would become much stronger than government in effect bringing governments under the control of business interests. Thus, we have the situation today where capitalism is not at all of the scale or type that Smith would have recognized. It is no longer that of a world controlled by small businesses in free and fair competition overseen by honest and responsible adults. There were to be constitutional checks and balances to ensure that commerce and governance each knew and respected its proper role and position. The historical reality overall was that no such checks and balances were able to prevent corporations from coming to dominate the global economy. But then the AIRR text acknowledges that under neo-liberalism the aberration in this liberal theory became extreme, especially with the financialization of capital expansion. And in my view, most honest liberals have to acknowledge how Marx’s unprecedented comprehensive critique of capitalism anticipated how this so-called free market would produce increasing levels of social inequality.[1] And further in China because of its revolutionary-socialist social-political context these growing forces of capitalist development have been still limited and strategically controlled.
And so here again I’ll recycle from back in August a telling of a recent phase of the story that is particularly relevant for our present situation and contains possible lessons for us in the West that are at least implicit and not so far from the surface that they cannot be made out in summary form by a discerning reader with an open mind. Is not the problem in geo-political relations with China in large part to do with an inability in western capitalism and its ruling classes to tolerate and countenance a society committed to a socialist project for the common good? What is it that the Western ruling classes fear? Is it really the loss of 'freedom and democracy' or does it have more to do with the inability to appropriate profits in the manner they have been use to ....?
Ellen Brown “Quantitative Easing with Chinese Characteristics: How to Fund an Economic Miracle” in Sheerpost, February 9, 2025.
My Precised Gloss
This is a precise’ of the Ellen Brown’s recent summary narrative account of China’s astonishing economic development. It is a story that tries to identify some of the main elements of the ‘Marxism with Chinese characteristics’ story. It is relatively accessible for those of us who are not trained economists.
China has been able to rise out desperate poverty in about 40 yrs. It has developed an impressive infrastructure.
This all requires money and lots of it; so where did the money come from?
The Chinese central bank has printed money. From 1996 to 2024 the money supply in China increased 5300% from 5.84 billion to 314 billion cny (yuan).
How did this happen?
Exporters brought foreign currencies, mostly US $ received for goods exported, to their local banks and traded them for cny needed to pay workers and suppliers. The central bank printed cny and traded them for foreign currencies and kept them as reserves thereby doubling the national export revenue.
A highly significant element in this development is that this 5300% explosion in cny did not produce uncontrolled inflation.
How was this achieved?
The central bank engaged in selling government securities in the open market thus ‘withdrawing excess cash’ according to Brown’s account. It (or the government?) imposed price controls on certain essential commodities – iron ore, copper, corn, grain, meat, eggs, and vegetables as part of its 14th five-year plan (2021-2025). The intention was to ensure food security for the people. And to maintain price stability, money was invested in manufacturing and infrastructure. GDP (supply) rose with the money available (demand) so as to keep prices stable.
In 1978 market-oriented reforms were introduced in China. Farmers sold surplus produce in the market, foreign investment was permitted, private businesses and foreign companies were encouraged to grow.
By the 1990s China was a major exporter of lower-cost manufactured goods because of lower cost labor and because of infrastructure development. China’s membership in the WTO in 2001 is also considered an important factor.
The lower cost of labor is possible because China subsidizes social needs thereby reducing operational costs of Chinese enterprises and improving labor productivity.
Government invests in public transportation infrastructure – metros, buses, rail, … all intended to be affordable for workers and for the affordable transport of goods to market.
Education and training of workers is subsidized. There is affordable housing for workers, especially in the urban areas.
Public health care is subsidized. There is a public pension system reducing the need for private retirement plans.
The government subsidizes and incentivizes key industries in technology, renewable energy, and manufacturing.
In the early stages of reform foreign investment was a key source of capital.
However, another key element has been China’s development of banks, lots of banks, community banks, regional banks, supporting local businesses by providing funds to get the latest technology. This diverse means of public and community banking means control over the valuation of currency, and over capital flows. The central bank acts as lender of last resort providing liquidity to other state/publicly-controlled banks when needed.
This complex system of publicly controlled banking in China and its complex system of technical controls, checks and balances admittedly is hard to follow in a summary narrative such as this. However, what must be emphasized, it seems to me, is that it is a public system first motivated by government or, lets say, a form of governance providing publicly determined priorities rather than simply by the pursuit of private profits.
Injecting money into the economy, as much as 80% from money printing, sounds extreme. But this monetary element must be understood within the context of China’s political-economy and macroeconomic policies of carefully structured 5yr plans. These are plans designed to serve the public good and the whole economy and they are funded by policy banks that are under public control. The profits are publicly owned. Private financialization and speculative exploitation is avoided and can be compared to what happened in the US and the West’s financial system in the so-called 2007-2008 financial crash.
Newly issued money is used for production so that increased supply is coordinated with demand so as to keep prices stable.
In China health and social services, which does not produce revenue, is still viewed as productive in its support of human capital for production. Workers needs to be healthy and well educated in order to produce effectively. And so, government needs to support the costs of health and social supports borne by companies and enterprises in order to compete with China’s more directly subsidized businesses.
The US led geo-political macro-economic strategy of vicious competition by means of sanctions and tariffs intended to damage one’s competitors perceived as enemies is seen, in China, as leading to economic warfare and perhaps to military conflict and actual warfare. This is strongly viewed as highly unreasonable and incoherent, and ultimately ineffective in that it is unnecessarily costly for the world economy and its ecology.
Production and wealth creation is better served by an overall cooperative context in which concerted and strategic public ownership and control, adaptive planning in governance, monetary control and regulation are all seen as necessary parts of the good of order in economy and now for ecological well-being as well.
Commentary
This, as I understand it, is a summary picture of the Chinese historical-materialist vision of social hope, a social hope that is very much needed at this moment in history. I believe that to the extent that this account, limited as it is, is approximately true, it then can serve to some degree as a ‘model’, at least for pedagogical purposes, here in the West. On a vast scale, which at times is needed, it especially gives content to this notion of communal conversions – economic and ecological that the AIRR text keeps referring to when it speaks of its GEM-FS methodology of social change.
Hugh Williams
[1] The political philosophy of liberalism underlying liberal economic policies was sustained, according to Marxists, by bourgeois economic thought where the market is believed in and government intervention is not. The liberal management of market demand that is supposed to overcome the capitalist crises of overproduction requires State expenditure financed either by raising taxes on the rich or by foregoing increased taxes and incurring fiscal deficits. If taxes are raised on working people aggregate demand is not likely to be raised and so would be ineffective in addressing the crisis. The problem is that these ways of financing needed State expenditures are both opposed by globalized financial capital thereby restricting State intervention options. Apparently, there are monetary instruments available but there are serious questions and concerns about their inflationary effects. Thus, liberalism tends towards social austerity in reaction to capitalist crises and its political philosophy becomes less credible as it manifests its internal contradictions with their increasing negative social and, now, deadly ecological effects. (See Prabhat Patnaik, Monthly Review onLine, May 12, November 16, 2024)