Tag: Economics

  • In Brief: China’s Marxian Paradigm

    In Brief: China’s Marxian Paradigm

    In China today, the fingerprints of American capitalist excess are hard to miss, as the golden arches and the KFCs stand lined up next to Walmart stores. The history of China’s economic development is a pretty simple story as told in the West: Mao’s Soviet-style economy was abandoned by Deng who swung open the doors to western capitalism and everything we see in China today is the mere culmination of decades of market magic. With this story lodged into our heads by so many western journalists, whose understanding of Marx is even less than their understanding of China, it is no wonder why Beijing’s trajectory is wide open to interpretation.

    The sequence of human history is one of modes of production. Societies organize around productive forces and, as these forces evolve, so does a new social formation eventually sublate the previous one existing. The Greek polis represents a sublation of Neolithic communal society, just as Medieval Europe represents a sublation of the Roman Empire.1

    The process is not mechanical and it has varied wildly depending on the region in question. For example, the capitalist mode of production was concretized only after a significant period of violent primitive accumulation driven by erstwhile feudal merchants who amassed vast sums of wealth at the expense of European peasants, African slaves and New World Indigenous clans. What capitalism has allowed us to do by way of revolutions in technology, science and philosophy, is gain a self-awareness of this historical process and ask the question: if capitalism is a sublation of the feudal mode, what might represent a sublation of the capitalist mode?

    The capitalist mode of production has brought with it a material abundance previously unknown to humanity. This helps to explain widespread resistance against any effort toward revolutionary change. On the other hand, capitalism has also carried over imperial tendencies toward warfare, environmental destruction and the deracination of the community. It is these noxious aspects of capitalism that have formed the basis of western populist demands and global revolutionary politics.

    Marxism-Leninism emerged from an impoverished Russian Empire long-mismanaged by Tsars wielding absolute power. For the Soviet Union, it expressed the post-revolutionary desire for rapid modernization without the capitalist hallmarks of colonial extraction and working class exploitation. With near-universal public ownership of production, these two aims were largely successful and the USSR experienced an improbable rise to superpower status, all the while providing housing, healthcare, free education and employment to all. 

    Mao Zedong was obviously heavily influenced by the Soviet experience but he recognized that his China of 1949 was even less developed than 1917 Russia, thanks to the compounded effects of Japanese invasion, civil war and a century of humiliation at the hands of European colonial powers. At its founding, the People’s Republic of China was almost an entirely illiterate, agrarian economy suffering from a massive drug addiction epidemic and in a state of chronic famine. 

    Mao set his modernization program along the lines of mass literacy campaigns, accessible medicine and large-scale irrigation projects. He recognized the feudal landlord class as a vestige of feudalism and a barrier to progress. That class was eliminated with land reforms. But, as a historical materialist, Mao also saw the bourgeoisie as an important ingredient to Chinese modernization. Adopted in 1949, the Chinese flag even includes a star each for the national and petit bourgeoisie, against a red background representing the revolution.

    Soviet socialism was a sublation of Russian feudalism that practically skipped the capitalist mode altogether. But it collapsed under a heavy burden of economic embargoes and repeated military confrontations against combined capitalist powers that had centuries of wealth accumulation under their feet.

    Relieved of sanctions in 1979, China has been determined to build socialism in the East along the timescale of how capitalism was built in the West: a period of wealth accumulation and technological advancement that will make it possible to transcend the global capitalist economy. Mao’s successor, Deng Xiaoping, rejected western capitalism and he modelled his own reforms on Lenin’s New Economic Policy.

    China has not engaged in foreign colonization or the subjugation of other lands. As a Global South country long-preyed upon by the West, they have recognized that their path to modernization must necessarily be different than it was for imperial states. With particular attention to Volumes 2 and 3 of Marx’s Capital, Beijing has instead constructed a public sector designed to capture the surplus value of their capitalist workforce and channel it toward the development of new productive forces.

    As Marx described liberal states, the surplus value produced by workers is claimed as rent, interest and profit. In liberal states, the disposal of this enormous surplus is decided by the private whims of financial firms, landlords and corporations—leading to the socially disruptive practice of outsourced labour and the curious phenomena of “dead money.” In addition, the circulation of surplus value in the form of loans, banking fees and debt-financing are tallied as part of the national gross domestic product—despite producing no value whatsoever. This has led the economist Michael Hudson to decry GDP accounting in the United States as “a travesty that credits the financial sector with producing a product, not as imposing zero-sum transfer payments.”2

    As a Marxist state, China treats surplus value as a social product rather than a private gain. Because much of the banking, resource, construction and manufacturing sectors are under state ownership, they are able to convert surplus value that is captured in the form of interest and profits and push a dramatic material transformation of the entire country. Where private ownership exists, party cadres operate within the enterprise to ensure compliance with national planning. China’s ability to build at breakneck speed is also facilitated by maintaining an extremely low cost of goods and services through strategic deflation and the “purging of rent-seeking profits” from the economy.3 This conscious suppression of price and profit are virtually unthinkable for a liberal country.

    The fault line between China and the West is therefore not one of “capitalism vs. socialism” but “liberalism vs. Marxism.” At this point in history, every country on Earth contains elements of both socialism and capitalism. In liberalism, capital accumulation is treated as an end in itself—and the result is a sprawling financial services sector that cannibalizes national industry in exchange for abstract financial products. In Marxism, capital accumulation is treated as an evolutionary step between industrial capitalism and socialist transformation. The result of this treatment is a country that looks like China.

    By compressing surplus value formation into material production rather than financialization, China is betting on a transformation of productive quantity into social quality, one that will eventually lead to a sublation of private capitalism by public socialism. This is not meant as an explicit endorsement of vanguardism, nor is it meant to praise each aspect of Chinese governance or policy decision made by Beijing. We should take lessons from China and adapt them to our own national circumstances. But that can only be done with recognition that their meteoric rise is resultant from the application of Marxist theory at the commanding heights of the economy.

    Thanks for reading!


    1. John Bellamy Foster explores the communal aspects of antiquity in “Marx and Communal Society,” Monthly Review, Vol. 77, No. 3: 47-64. ↩︎

    2. Michael Hudson, “Finance Capitalism versus Industrial Capitalism: The Rentier Resurgence and Takeover” in Review of Radical Political Economics, 2021: 12. ↩︎

    3. See: Kevin Walmsley, “Top China execs forecast more deflation and falling profits ahead,” Substack, Nov. 2025. ↩︎
  • In Brief: Who Are the Globalists?

    In Brief: Who Are the Globalists?

    Question:

    Who are the “globalists” that are referenced so often?

    —P. K.

    Hi P. K.,  

    It seems the right will do anything but name capitalists as their enemy. While “globalism” can mean many things—including recognizing the global impact of local actions—the right tends to use the term as a sort of conspiratorial umbrella with which to shade their centrist opponents. In this vein, a globalist is someone who advocates trading off national sovereignty to a multinational governing body, such as the European Union or United Nations. Previous years have seen fixation with the World Economic Forum and their “Great Reset Initiative,” an alleged scheme to end personal property ownership through mind-controlling vaccines and outright seizure.

    From a Marxist perspective, the frustrating aspect of the right wing globalist conception is the truth embedded within it. Globalization is characterized by multinational firms outsourcing employment, corporate-drafted free trade agreements, international warfare and the financial takeover of the economy by hedge funds, asset managers and banks. These trends have been a chimera for the left for some decades now, and past protests in Quebec, Seattle and New York attest. 

    The membership of corporate clubs like the WEF is drawn directly from the global capitalist ruling class. Meanwhile, international trade agreements like the USMCA and political organizations like the UN and OECD are subsidiary to the reality of global commerce and economic interdependence. In other words, “globalism” is a mental image projected by the actually existing liberal capitalist economic order. The right seeks to alter the image while the left wants to smash the projector.

    Incredibly, Karl Marx and Friedrich Engels perfectly diagnosed the problem in 1848:


    The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal interdependence of nations. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.1

    The “great chagrin of Reactionists” toward globalization during Marx’s lifetime has clearly never gone away—it is the root of the “globalist” slur. Many millions of people around the world rightfully bemoan the loss of local industries and a cosmopolitan economy that rapidly revolutionizes culture. But the right has never wrapped their arms around the problem, as evidenced by reflexive conservative support for corporate-friendly rates of taxation and deregulation that lubricate the globalization machine. 

    The reason why corporate-funded media and think tanks are so hostile to socialism is because it is the only remedy to what ails the capitalist economy. Unfair trade and the outsourcing of labour and capital is impossible under a system of nationalized finance, rational economic planning, public ownership of strategic industries and worker owned enterprises. Exceptionally low rates of taxation on workers are also possible under a system that allocates public sector surpluses toward infrastructure, as China proves. Facts are stubborn things and capitalism will one day have a final reckoning that puts an end to the contrived “globalist” contention once and for all. 

    In sols.

    Send your questions to the Reclamation: editor@thereclamation.co

    Footnotes:


    1. Karl Marx and Friedrich Engels, “Bourgeois and Proletarians” in The Communist Manifesto. ↩︎
  • Ask the Editor: Oil Demand and Destruction

    Ask the Editor: Oil Demand and Destruction

    To the editor,


    Is the energy crisis stemming from the war on Iran a simple matter of supply and demand?

    Cheers,

    Breezy.

    [Sent from Substack]

    Dear Breezy,  

    The world is staring at a billion barrels of oil lost due to military actions undertaken by the belligerent governments of Israel and the United States. This number will only go up with each passing day of disruption to maritime traffic in the Persian Gulf. To put that number into context, it is roughly equivalent to ten full days of total global consumption. This kind of supply squeeze will present itself unevenly; the higher cost of gas and transported goods can be either a nuisance or a calamity depending on the financial capacity of consumers.

    Turning to Karl Marx the political economist, he himself did not live to see oil come into dominant use and it was coal that reigned supreme during his Victorian era. But he recognized fossil fuels as a foundational mean to the capitalist mode of production because their dense energy content allowed for the intensification of human labour and factory output.

    The utilization of this new mean of production is what ultimately lead to the standardization of wage labour and industrial processes. Whereas water mills depended on the ebbs and flows of natural streams, the coal-fired steam engine could be plunked wherever potential workers were, with trains and ships doing the rest. Oil merely advanced the technological revolution that coal set into motion regarding production and circulation.

    Because oil is so foundational to the capitalist mode of production, its presence in the marketplace cannot be reduced to the dollars and cents of each barrel. Countless wars have been fought, governments toppled, acres fracked, blockades raised—all to influence the direction that precious crude flows black. If the price is too high, economic activity will be suppressed. If the price is too low, Big Oil bleeds profits. It’s a fragility that puts Goldilocks to shame.

    In Marxian economics, supply and demand “play a vital surface role in generating price movements for a particular commodity” without which “there could be no equilibrium price.”1 With the economic rise of China and the Global South, oil prices routinely clocked in over $100 per barrel as new demand pressured existing supply. While oil companies blistered with cash, high prices suppressed potential consumption in virtually all other areas of the global economy. After all, only 15 countries export meaningful quantities of oil that another 160 countries must bid on. 

    As the process of capital accumulation in one sphere became a contradictory force suppressing accumulation in others, the economic system demanded a way to get beyond it.2 Fracking technologies were unlocked by American public–private partnerships and they opened up vast supplies of oil in the United States and around the world. Fracking is what brought the supply and demand of oil back into an equilibrium that guaranteed both stable profits and continued future growth. 

    What the war against Iran has accomplished is to throw disequilibrium back into the oil markets, this time because of disruptions to shipping in the Strait of Hormuz. As many Gulf producers go toward zero, oil operations outside the region see their profits soar. The sudden scarcity of oil and its byproducts has led to the cancellation of tens of thousands of planned flights, MRI screening is pressed by helium shortages, semiconductor manufacturing in Asia is throttled and a lack of fertilizer is scarring agriculture in Africa and South Asia.

    Disruption to supply inevitably leads to destruction of demand. Free market orthodoxy dictates that price adjustments alone bring about equilibrium in commodity markets. But it will be shown that the value of oil to labour processes and capital accumulation transcends the spot price of each barrel. The oil market is an artifact of economic planning carefully designed to keep the downstream tributaries trickling outward. With those plans now buried under Middle Eastern rubble, capitalism is confronted with yet another “constantly overcome but just as constantly posited” barrier.3 

    In sols.

    Send your questions to the Reclamation: editor@thereclamation.co

    Footnotes:


    1. David Harvey, A Companion to Marx’s Capital (Verso, 2010): 166. ↩︎

    2. The barriers that capital imposes on itself before leaping over them are explored by Karl Marx in his Grundrisse (Penguin, 1993): 410. ↩︎

    3. Ibid. ↩︎
  • Value

    Value

    This article is part of a series on classical Marxism. 

    One major characteristic separating the Marxist school from other philosophies is the engagement with liberal economics following Marx’s exhaustive survey of classical English political economy. As physical beings, we have real biological needs sated by an ever-more complex capitalist economic system. It is this system of production and consumption that cannot help but exert influence on our conscious thoughts—and that is true even as few people have any meaningful understanding about how our economic system works. So many imagine economics as stock tickers, randomly fluctuating commodity prices, national GDP charts, unemployment percentages and bespectacled accountants with blank personalities.

    Statistics are revelatory but they are only surface-level expressions of the multitude of relations between people engaged with each other in production and consumption. More generally, global society as a whole “does not consist of individuals, but expresses the sum of interrelations, the relations within which these individuals stand.”1 In economic terms, wealth and status are acquired relative to others. Within capitalism we can say an individual is “wealthy” only because he generally has more money or assets than most others. We can identify others as “employee” or “employer” or “contractor” or “entrepreneur” only in the presence or absence of a relation to clients, a boss or paid staff. Value is likewise a social product created through interrelations. Marx writes: “The law of gravity asserts itself when a house falls about our ears. The determination of the magnitude of value by labour time is therefore a secret, hidden under the apparent fluctuations in the relative values of commodities.”2 Like gravity, value is asserted not as a material force but as a relation between subjects locked in a process of exchange.

    In the realm of capitalist relations, the signature object of production is the commodity.3 A commodity embodies three value forms in a self-supporting dialectical unity:

    • Use-value refers to the utilitarian qualities of a commodity and its ability to satisfy the wants or needs of people. For example, chicken and vegetables can satisfy hunger, just as a smartphone can satisfy the want of entertainment and communication. How one might use a commodity is a subjective quality unlike price.
    • Exchange-value roughly corresponds with the objective cost to produce commodities as they move along the supply chain. Price can fluctuate wildly in accordance with monetary liquidity and the law of supply and demand but, in equilibrium, the exchange-value of a commodity tends to reflect the cost of producing it—the labour time and materials. For this reason, chicken and vegetables tend to exchange at significantly lower prices than smartphones which require specialty materials and expert design. Supply and demand determines short-term oscillations in price but it does not define exchange-value.
    • Value. Value refers to the natural material and quantity of labour congealed in a commodity. It is a historical constant that, absent mental and physical human labour, nothing can be produced or consumed. Therefore, labour is the only component of the process that transforms nature into commodities. Value is in constant flux and cannot be measured with precision because the labour-time congealed by a commodity must be socially necessary if it is to impart value. Inefficient workers or technologically-backward factories cannot impart value into their product by taking more time than is necessary to produce it. By the metric of socially necessary labour time, chicken and vegetables purchased at the grocery store will have a lesser value than those same items served on a plate in a fine dining restaurant. A smartphone, on the other hand, will have more value than either of those commodities because of the additional labour time required to produce a more sophisticated item.

    To avoid confusion, it should be emphasized that this unity of values is what is found in commodities on the market. Marx did not believe that value was a measurement that could be universalized. Previous modes of production saw the construction of mountainous pyramids and gleaming temples which contain impossibly-high amounts of congealed labour and priceless materiel and no realistic use-value or market exchange could ever justify producing such wonders today. The rationale behind the historical production of priceless artifacts, monuments and palaces belong to entirely different sets of economic relationships that are now extinct.

    In present times, an individual may expend great quantities of labour time writing bad novels or packing sand castles and never produce a commodity because their product has no use-value that someone would exchange for. The last idiosyncrasy to note is the world of scams, derivatives, fiat currency and financial speculation that are all designed chiefly to transfer money between market participants without contributing to the global store of value. One notorious example is quantitative easing, which sees the money supply increase faster than the actual production of value. This is what causes inflation.

    With knowledge of the value forms, one can apply them to any commodity that is produced and sold in the capitalist system we live in. A potted plant finds use-value in its aesthetics and air purifying potential. It might exchange for $20 and it congeals a value relative to its growing conditions, the time it took to reach a 12 inch height and the transportation required to deliver it to the local gardening centre.

    As the only commodity capable of imparting more value than it withdraws, labour is the linchpin—without this commodity, the global web of capitalist production collapses. The wage and salary worker must “bring a commodity to the market, i.e., his own skin.”4

    The employee offers up their labour-power for use by an employer, transferring a value that correlates with their cumulative experience and skills. In exchange, they are paid a wage that is primarily determined by the supply and demand of the labour market. And it is from this special commodity where the enormous surpluses of the modern age are derived, where government budgets are inked, armies are raised and corporate largesse is created: that labour-power injects more value into a commodity than it will receive back in a wage.

    Discovering this surplus-value is what led to Marx’s articulation of crisis theory; as workers produce a surplus beyond what they are able to consume, the system must be constantly expand in order to absorb the created surplus. Inherent to capitalism are periodic eruptions due to overproduction and barriers to expansion that result in economic recessions and depressions. This tendency toward crisis is papered over by mass immigration, warfare, “free trade” agreements and a flow of debt and credit, but crisis in capitalism can only be delayed and never avoided.

    In this capitalist economy, the use-value of cheap labour is sought the world-over and unemployment levels are carefully managed in order to suppress wages via inflow immigration, the outsourcing of production and state expenditures or cuts. The result is a feast whereby a global ruling class gorges on those with nothing to sell in the market but their bodies.

    It was shown that the appropriation of unpaid labour is the basis of the capitalistic mode of production and the robbery of the worker is carried out by its means; that the capitalist, although he buys the labour-force of the worker at the full value which it possesses in the market as a commodity, yet derives more from it than he has paid for it, and that in the last instance this surplus creates the total amount of value from which the capital steadily increasing in the hands of the capitalistic class is amassed.5

    As presently constructed, the capitalist class needs the working class to create value but the working class needs the capitalist class to actually survive. A massive power imbalance between the elite capitalist ruling class and workers is thus concretized by economic necessity and witnessed by the commodity, value-forms conjoined.

    Further Reading:

    Karl Marx, Critique of Political Economy: Part One.

    ———–


    1. Karl Marx, Grundrisse (Penguin, 2005), 263. ↩︎

    2. Karl Marx, Capital, Volume One (Ancient Wisdom Publications, 2019), 49. ↩︎

    3. David Harvey, A Companion to Marx’s Capital (Verso, 2010), 23. ↩︎

    4. Karl Marx, Capital, Volume Two (Penguin Classics, 1993), 285. ↩︎

    5. Friedrich Engels, Anti-Dühring and Other Works (Graphyco Editions, 2021), 29. ↩︎