Across the swamps of time, revolutions, colonialism, neo-colonialism, imperialism, world wars, industrializations; through the trials and zig-zags of both socialist and social-democratic experiments in working class leadership in society, comes an idea of Vladimir Lenin. In 1921, the "command" economy of the Russian revolution and civil war was in collapse, forcing a retreat to a socialist form of state monopoly capitalism. This model, called the New Economic Program, lasted until 1928 in the USSR, when it was terminated under Stalin's leadership.
The essential idea was that Communists armed with science could manage market successes and failures better than capitalisms. A basic premise of the proposal was that mixed economies – advancing public and market/capitalist sectors – were unavoidable, and indeed necessary for the transition and development of conditions permitting fully humane relations.
This idea has more than once been treated as heresy within the Communist movement. To some, the compromises of the New Economic Policy compromised the the socialist ideal of abolishing capitalism and feudalism, and was unprincipled. Even Deng Xiaoping, who would later lead the Chinese Communist Party in expanding and developing Lenin's idea, was branded a "capitalist-roader" during Mao's Cultural Revolution.
In China's transformation, Lenin's intuition bore fruit. The socialist goal of a "harmonious and moderately prosperous society" adopted by the CCP gave state-led capitalist development a purpose that the essential anarchism of markets alone cannot achieve.
Socialist-led vs capitalist-led industrial policy
Thus was born a concept of market socialism, and more generally socialist-motivated industrial policy in mixed economies.
All governments have an industrial policy: the state's plan for essential manufacture and resource development. Whether for profit, or paid whole or in part by the state, the priorities for national investment, if not a purely market model, must provide: defense, security, food, shelter, clothing, and a plan for future progress. If you cannot produce them, you must acquire them from someone who does.
Billionaires, even the liberal ones, despise state-led investment, both in theory and by intuition: bourgeois liberty was founded historically in opposition to Royal monopolies, taxes, and regulation. "Governments are bad at picking winners", they like to chant. But they are learning otherwise. In the current pandemic depression, the socialist enhancement of industrial policy proved in China, Vietnam, and most of the social democracies that it can out-perform capitalist-led societies, in both growth and especially in recovery from crisis. One thing billionaires are good at is sensing power. They sense it with China. They are indeed inspired to emulate its inevitable successes.
What does that mean?
It means there is more than one enlightened billionaire, not just fascists, who are thinking "authoritarian" thoughts about this crisis, and about the paralysis of US democracy. They are drawing the conclusion that more powerful, directed, supervised, industrial policy, like China,'s, can save America. In their vision, that policy would be benign, rational, pro-science, cosmopolitan rather than racist, free from Trumpism but also without the socialist ideals of harmony and equality.
Let's look at a couple of examples.
About eight years ago, Bill Gates wrote a tribute to a celebrated biography of Deng Xiaoping. The biography charts Deng's struggle to develop an economic and political recovery strategy following the failures of the Great Leap Forward. His theories were heavily influenced by Lenin's New Economic Program, and the results were staggering: exceeding 10% annual growth rates uninterrupted by business cycles or externalities for more than 20 years! But neither Deng nor China would not call it a miracle: it is demonstration, that a scientific, fact-based industrial policy guided by socialist goals can outperform capitalist led societies.
Gates' greatest praise is not for Deng's market reforms but his advances in state-directed education, health care and technology innovation.
Here is Gates' assessment of Deng Xiaoping:
Although Deng's transformation of China cannot be separated from the violent attacks that he administered under Mao's rule or the brutal approach he took to stopping the Tiananmen Square student protests, the economic reforms have improved the livelihoods of millions of people. China has capitalized on advances in education, healthcare, agriculture and innovative technology to help accelerate their own development and transition beyond the need for aid. To have done this essentially in one generation is an unbelievable accomplishment and is unique in the history of the world.
The most important sentence is the last. It shows that one of the world's wealthiest men has broken with the presumption of socialism's failure following the collapse of the USSR. Gates replaces that narrative with a new one: socialism with Chinese characteristics is an astounding success. (We should note, too, that there is more than one way to read Gates' caveat about the Tiananmen repression – and not necessarily as a criticism).
Not long after, in 2015, Thomas Piketty was a panelist at an American Economics Association meeting in Boston. After being artlessly red-baited by Harvard economist Greg Mankiw (Chair of the Council of Economic Advisors under Bush), the renowned French economist countered by recounting a dialog with Bill Gates on the subject of the wealth tax, a reform Piketty considers essential to "manage aggravated inequality tendencies" in capitalism.
Gates: I agree with nearly everything in your masterpiece, except the wealth tax. I support a progressive income tax. But why will the government make better use of my wealth than I have, or will, through my foundation, and company?
Piketty: If you are right, perhaps we should just eliminate all taxation on ALL billionaires, in the national interest?
Gates: [after pause]: You may have a point. I will think about it. Did you know I am a fan of China's leader, Deng Xiaoping?
Piketty: As am I.
As Piketty's example illustrates, the curse of the billionaires, even the ones more humanistic in outlook, is that their main adversaries in pursuing a humanistic vision are the reactionary billionaires. But they cannot destroy them without undermining their own position with regard to the privileges of wealth.
Bill Gates is not the only billionaire taking a new look at China. Bloomberg News published the following in an unsigned editorial (which we can interpret, I think, as approved by Michael Bloomberg, the firms's owner and fourth-richest man in the world):
When China began allowing private businesses and foreign investment four decades ago, many outside the communist country expected that as its economy became more capitalist, its politics also would become more democratic. They didn't. Instead, the Chinese system, which puts stability and cohesion ahead of individual freedoms, became adept at delivering prosperity, with the Communist Party still firmly in control. For Beijing, its success legitimizes its model as an alternative to the liberal values of the West, an idea the U.S. and its allies have resisted. It's a debate that's been intensified by the Covid-19 pandemic.
It's striking how the terms of the debate have changed in the current health and economic crisis, from socialism vs. capitalism to "authoritarianism" vs. liberalism. And the conclusion seems to be that "authoritarianism" is now a legitimate political model. Here again, though, it is important to recognize that state-led investment for U.S. billionaires would not be inspired not by the socialist vision of "a harmonious and moderately prosperous society," but by Microsoft, Google, and Amazon.
The paths forward
U.S. progressives, too, are challenged by Chinese socialism to confront basic issues of democracy and national unity in the midst of economic and institutional collapse. The formation of the "more perfect union" proclaimed by President Barack Obama is not far in spirit from the Chinese Communist Party's goal of "a harmonious and moderately prosperous society."
Under the weight of gaping class, racial, gender and nationality inequities, and injustices, it is difficult to imagine other than a strong mission guiding strong hands to return in earnest to the "more perfect union" path. The two-party system may not survive this trial unless a new equilibrium is achieved. The limits of civil division in the US have been reached, if not breached.
I think economist Dani Rodrik adequately summarizes the progressive adaptation of the idea behind Lenin's New Economic Policy, though without attribution and using the lingo of progressive capitalism more than market socialism. He is a serious student of Chinese development, however. As he often writes, the choices of political models tend to be "path dependent." In other words, history matters; what has occurred in the past persists because of resistance to change. As Rodrik puts it:
For starters, we must recognize that a mixed, state-driven economic model has always been at the root of Chinese economic success. If one-half of China's economic miracle reflects its turn to markets after the late 1970s, the other half is the result of active government policies that protected old economic structures – such as state enterprises – while new industries were spawned through a wide array of industrial policies.
The path of recovery for the United States will depend on how much our current path gets wrecked, and how much can be salvaged. Looking down the path we are now on, the wreckage is not over. The project of recovery, to say nothing of the larger task of transformation, requires political harmony to achieve, and that is something capitalist billionaire-led approaches are unlikely to produce.
