11.7.5: The Convergence of Capitalism and Socialism

 11.7.5: The Convergence of Capitalism and Socialism 

Regardless of the validity of these mutual criticisms, as nations industrialize they come to resemble one another. They urbanize, encourage education, and produce similar divisions of labor (such as professionals and technicians; factory workers and factory managers). Despite their incompatible ideologies, both capitalist and socialist systems have adopted features from the other. That capitalism and socialism are growing similar is known as convergence theory (Form 1979; Ten Brink 2019). Changes in Socialism: Convergence When an economic crisis hit the United States in 2008, it spread quickly around the world. To decide what they should do, the leaders of the 20 countries that produce the most consumer goods met in Washington. The Chinese leaders said that no one should worry about them not being a team player; they knew that their actions would affect other nations. (Yardley and Bradsher 2008) In the 1980s and 1990s, the rulers of Russia abandoned communism. Although making profits had been a crime, practically overnight making profits was encouraged. Chinese leaders saw the potential and joined the change. However, they kept a communist government. Their encouragement of profits unleashed an entrepreneurial energy that, with its new businesses, rapid industrialization and urbanization, and vast exports, has transformed the country. A sign that this change is fundamental is China’s Communist party welcoming the new capitalists. Almost 200 Chinese billionaires now hold positions in the government or the Party (Muravchik 2019). The switch to capitalism has led to such an immense production of wealth in China that China now has more billionaires than the United States (“Hurun Report” 2017). Attitudes toward profits have swung so extremely that some Chinese books even praise Bill Gates as a model for youth (Guthrie 2008). And just as in the West, Chinese capital moves to the cheapest labor. You know that American capitalists moved millions of jobs to China, but did you know that Chinese capitalists are now moving factories from China to Vietnam and Africa? And for the same reason: They can pay these workers less than Chinese workers (Lin and Strumph 2018). 371 For a glimpse of the new capitalism in China, read the following Cultural Diversity around the World. Cultural Diversity around the World A Fierce Competitor: The Chinese Capitalists

          Socialism has the virtue of making people more equal. Socialism’s equality, however, translates into making almost everyone equally poor. Capitalism has the virtue of producing wealth. However, a lot of people remain poor, leaving deep gaps between wealth and poverty. Realizing that their country was mired in poverty and that capitalism has such capacity to produce wealth, Chinese leaders turned to capitalism. One consequence has been an astonishing growth of wealth. The irony is thick. China’s capitalism directed by communists has lifted a half-billion people out of poverty (“China Overview” 2014). This new capitalism has also produced extravagant ostentatiousness. Outside Beijing, the capital of China, Zhang Yuchen built a mansion. This is no ordinary mansion, like those built by China’s other newly rich. It is a reproduction of the Chateau de Maisons-Laffitte, an architectural landmark on the Seine River outside Paris. Based on more than ten thousand photographs and built at a cost of $50 million, the Beijing replica matches the original edifice detail for detail. The architects followed the original blueprints of the French chateau, even using the same Chantilly stone (Kahn 2004, 2007; Jenn 2017). In the midst of China’s transition to capitalism, poor farmers have remained poor farmers. This has fueled anger and resentment, which have kept the Party busy sending out the army to squelch riots. It turns out that to make themselves wealthy the powerful have taken the farmers’ land. Replicating the Maisons-Laffitte chateau and its nearby luxury homes turned 800 farmers into landless peasants. The spiked fence, the moat, and the armed guards—looking sharp in their French-style uniforms complete with capes and kepis—are not just decorative. They also keep the peasants out. In most places, you need connections to become wealthy. It is the same in China. There, connections refer to the Communist Party, since this group holds the power. Yuchen has those connections, which he used to get the peasants’ wheat fields rezoned from farmland to a “conservation area.” He was even able to divert a river so he could build a moat around the chateau, one of the finishing touches on his architectural wonder.

As China has embraced its version of capitalism, wealth has grown. China is now moving into the next phase of capitalism, with the emphasis changing from production to consumption. This shopping mall is in Shanghai. Credit: Ivan Nesterov/Alamy Stock Photo 

           Beneath such capitalistic excesses lies this irony: China’s capitalism has become a threat to the capitalism of the capitalist countries. Harnessing the state machinery, the Chinese leaders have proven themselves nimble at seizing opportunities for profit, in reacting to competition, and in accumulating vast amounts of capital. In another irony of history, the Western capitalists have become envious of China’s success (Karon 2011; Panitch and Albo 2019). For Your Consideration → Where will the top Party leaders fit in the class system that is emerging in China? Why? (To answer this, consider the connections and resources of the Chinese elite.)