Marxism International

Today is the 135th anniversary of the birth of Lenin.   It is being noted everywhere, but primarily in the east where, during his last illnesses after 1921, Lenin devoted most of  his thoughts on the coming world revolution.    As it turned out, that revolution - in the form of anti-colonial struggles in Africa and Asia – would only realize its successful denouement twenty years and more after Lenin’s death.

It would have been heresy then to say so, but did Lenin come to believe near the close of his life (he died in 1924) that the victory of Communism somehow lay in the struggles of the exploited and downtrodden in the colonial East?   Marxism from its earliest times had fundamentally believed in the industrial working class, the proletariat, as the historical absolute, the infallible harbinger of revolution.  

It is of course too early to tell if the stirrings in Asia are but the preface to the end of capitalism.  But it is in India, not England, China, not Germany, and in the former colonies of Indo-China, not in Brussels or Paris, where Lenin is today most honored.

You may have seen this morning’s op-ed rant by George Melloan in the Wall Street Journal.   I am
talking about his piece on the “courting” of “Mother India”
by people he does not like.  

It’s a bit churlish even by WSJ standards.  

First,
George is upset at China’s recent overtures to her western
neighbor.   He sniggers at last week’s visit to New
Delhi by the “well-tailored, charming and eager” Premier Wen
Jiabao.   George is much more smitten with Condoleezza
Rice’s.   Her recent trip to India, where she presumably
was no less “well-tailored, charming and eager”, was an
effort to waltz the South Asian giant away from Beijing’s
embrace.

The real focus though, was on Russia.   And, especially Vladmir Putin’s attempt to bring China and India closer to Moscow in a sort of “triangulating“ manoever designed to confound US designs in Greater Asia. 

“[The
Russian's] are dreaming,” says George slyly, pretending to contradict
his reader’s natural assumptions to the contrary: “It’s not
clear that either China or India wants to cast its lot…with a
Russia that seems to be growing more and more estranged from the
western democracies.”  

But to many outside the
State Department and the editorial room of western financial
newspapers, a China/India/Russia reapproachment makes
sense.   Beside common borders and a shared history of
socialist economics, there are the matters of energy, economic
development, religious fundamentalism, and a general wariness of a
unipolar world dictated to by the US.  

And
India, which finally threw off the yoke – after 100 years
– of the most pompously hypocritcal examplar of “western
democracies”(the English), might be loathe to take advice on who
they should or should not associate with.

That goes double for China.

And,
in a larger sense, India and China are but two stars of
an Asian galaxy that is changing
rapidly.   National self-determination, the right of
each nation to develop along its own chosen path — a goal most
definitively and eloquently outlined by Lenin more than eighty years
ago — is resurfacing not only in Asia but throughout
the so-called “third world”.

This weekend, China will join with other developing nations from Asia and Africa in Indonesia to celebrate the 50th anniversary of the Bandung Conference,
which led ultimately to the founding of the Non-Aligned Movement
in 1961.   It is a moment of triumph for China’s leaders.

Trade
with Asia and Latin America is exploding.   China’s trading
relationship is now more than $20bn and will surpass that of the US in
a few years.   Aluminum, bauxite, coal, and, especially, oil
are being snatched up by an energy-hungry Chinese at an unprecedented
rate.

From Rio de Janeiro to Caracas to Johannesburg, China is clearly the nation to watch.   She
is making huge inroads everywhere throughout the developing
world.    Some are now even speaking of a “Chinese
model” (e.g., a planned economy, one-party state) to replace
the failing neo-liberal paradigm of “free markets” and
“multi-party democracy” which is seen in many quarters (especially in
Latin America) as not doing enough to pay the rent, let
alone provide a viable path to national power and prosperity.

And
many throughout these regions point out that “multiparty democracy”
often means little more than different elite groupings of
competing entrepreneurs all ultimately beholden to foreign capital
and acting in its interests, to the detriment of that of its national
citizens.

Too – and this is what is
really upsetting to the George Melloans and Condoleezza Rices of
the planet – it is now becoming increasingly
clear almost everywhere that America now needs Asia
much more than the other way around. 

America
needs raw materials, cheap labor and money.   What Asia needs
is increasingly being obtained from centers outside the US.

And
then there’s that nagging question of America’s profligate habits,
its inability to save, and its propensity for ever-increasing
debt.  

It just so happens that the two largest owners of America’s debt are in Asia.  Japan is one.

China is the other.

But, what of India?  And the new relationships being contemplated, especially between New Delhi and Beijing?

China
and India virtually invite comparative study.  The modern versions
of these states both started from positions of revolutionary
change amidst great poverty. In 1950, despite possessing together
nearly 40% of the world’s population, China and India’s share of world
output was 5% and 3%, respectively.   Both began the latter
part of the twentieth century with ambitions to replicate
the policies of Stalin’s
Soviet Union in industrializing its economy and modernizing its
agriculture.   And both adopted, more or less, the
foundations of a Soviet-style planned economy.

Time was to treat these Asian giants quite differently.

China completed its revolution.  India did not.   China, following the upheavals of the Great Proletarian Cultural Revolution
– an experiment in social engineering unprecedented in human history
– created out of whole cloth a new model of third world development,
untrammeled by neo-Confucian traditionalism or western capitalism.

India,
on the other hand, remained suffocated by an ancient caste system
and the worst features of British imperialism, its population 
infused with the top-down mentalities of an insouciant and
browbeaten people.   Today, India struggles to achieve the
status of economic powerhouse, but history is stacked against it. 
As Martin Wolf
recently pointed out, “[China & India] are heirs of great
civilizations.   But China’s civilization is inseparable from
its state, while India’s is inseparable from its social structure,
above all from the role of caste.”

China’s exponential growth is
based on high rates of savings (ten times that of India), a heroic
investment in infrastructure, universal education, a “Stalinist”
commitment to rapid industrialization, and an economy friendly to
foreign direct investment.   India’s economic growth, on the
other hand, is increasingly service-based and (apparently)
jobless.   Similarly, as Wolf notes, “Chinese politics are
developmental, while India’s remain predominately clientelist.”

People
like George Melloan are paying increasingly close attention to what is
happening in Asia.  They may not like what they see, but what is
happening there will — to a far greater degree than is comfortable for
western democracies – determine what kind of a world emerges in
the morrow.

Next: Happy Birthday, Lenin!

This morning’s Financial Times carries an interesting piece by Andrew Balls and Richard McCregor on China’s “dollar dilemma”.   Should she revalue the renminbi (currently pegged at Rmb8.28 to the US dollar) for the first time in more than a decade?    American manufacturers and labor unions say yes; the current peg costs companies sales and unions,  jobs.    And the US Congress, as impotent as ever in creating either — at least in America — has joined the pack.

Rumors of an impending turn in China’s exchange rate policy have been rife since the Asian economic meltdown during the late 1990s.   Back then, the US current deficit, according to Balls and McCregor, “could be seen as a reflection of private capital flows, attracted by the [US's] strong productivity growth”.   This time, however, things are different.

Now, the deficit (estimated at nearly $700bn, or nearly 6 per cent of GDP) can largely be laid at the door of foreign state banks (mainly from Asia) buying US treasury bonds.   China alone holds more than 40% of all foreign exchange reserves held by developing countries.   In many ways, it is countries like China, by continually buying the US dollar in its weakened state (down nearly 20% since the Asian crisis of 1998), that have financed Bush’s war in Iraq and the substantial tax cuts of the past two years.

At the same time, the current trade imbalance with China ballooned this week to $328bn — the largest ever — and there are rumblings in Congress that the current exchange rate regime is added support for China’s ruinous exports.   This reflects the concern of the G7 that currency “flexibility” on the part of Asia is a necessary first step in “rebalancing” the world economy.

All this is part of a larger program program of reigning in the Chinese economic powerhouse.   The Bush administration has enlisted Japan, especially, in this undertaking.  The Wall Street Journal this morning reports that Tokyo has begun allocating to Japanese companies the rights to drill for natural gas in waters claimed by China.   This comes at a time of increased tension between the two Asian countries, due largely to Japan’s calculated insults to both China and the Koreas over the memory of its WWII atrocities when it invaded and occupied both countries.

But Bush, agree observers, is playing a precarious game; he needs the Chinese as much or more than they need him.  He recognizes that, while such grossly assymetrical trade relations cannot continue indefinitely, China has helped finance the growing US budget deficit.   At the same time, this two-edged sword is challenging the US for supremacy in Asia.   Bush is steering a middle course;seeking to pressure but not alienate completely the leaders in Beijing.

But, will Beijing take heed and revalue?   Not likely.   The impetus for such a move is absent.   Chinese growth rates are right on target.   Inflation is under control.    And the huge trade surplus with the US is largely offset by the substantial deficit China runs with the rest of Asia.   Too, most polls suggest that Americans for the most part do not blame China for the decline of US manufacturing or the concomitant loss of well-paying jobs overseas, factors most often cited by Congressional critics of China’s monetary policy.

In fact, the decline of American manufacturing has its antecedents in events long before 1978, when China began its Long March to economic supremacy in Asia.