A clear understanding of the truth of 'State Capitalism'


(Photo: CGTN)

One of the so-called arguments used by the United States in waging a trade war against China is that it has labeled China's economic system as "state capitalism", which is not new. In fact, this is not the first time for the West to do so.

I. Which economic system is the real "state capitalism"?

State capitalism is reflected in two aspects: First, the control of state power over enterprises. In the words of Lenin, "state capitalism is a kind of capitalism in which the state power directly controls these or those capitalist enterprises in the capitalist system",  second, the state's supervision and regulation of capitalist economic development. 

As Lenin put it, "monopoly capitalism is changing to state monopoly capitalism because many countries have begun to implement social regulation of production and distribution due to the circumstances."


(Photo: CGTN)

Although the US is known as the representative of the free market economy and laissez-faire capitalism, in fact, the role of the state in economic development is also very obvious and important in the US. Therefore, the so-called pure free market economy and laissez-faire capitalism never really existed, and the capitalism we have seen in reality is closely interwoven with state capitalism.

II. What is the intention of the "state capitalism" arguments?

The purpose of the "state capitalism" arguments is very clear, that is, to leverage the opposition between the so-called "state capitalism" and "lasses-fair capitalism" to justify capitalism and create favorable public opinion for curbing the development of developing countries, especially China.

On the one hand, they try to shift and conceal people's doubts about the inherent ills of the capitalist system, and ascribe the crisis of the capitalist system caused by the basic contradictions of capitalism to the threat of "state capitalism."


People lay underneath the iconic Wall Street bull during a rally against the proposed government buyout of financial firms on September 25, 2008, in New York City. (Photo: VCG)

On the other hand, they directly point at socialism with Chinese characteristics, unscrupulously try to distort, smear and vilify the socialist market economic system of China. They attempt to dent people's confidence in the socialist system with Chinese characteristics and the socialist market economic system, and to force China to give up the proven successful development path and socialist system, so as to ultimately curb the development of China.

III. Distort the socialist market economy as economic hegemonism

Market economy and capitalism are two different things. The market economy is a way of resource allocation, which can be combined with the capitalist system as well as the socialist system.

The capitalist market economy and the socialist market economy have something in common- it's the way of resource allocation and commodity economy relations. In the meantime, we must realize that the market economy is a social and historical concept that may show different characteristics in different social systems and at different stages of development.

It is even more mistaken to equate the active role of the government with "state capitalism". The relationship between the government and the market is the subject of the evolution of the modern market economic system. 

The government and the market are complementary to and inseparable from each other, which is the law of the development of market economy in socialized mass production.

IV. "State capitalism" in socialist revolution and development

Historically, socialism and "state capitalism" are not unrelated. What China has experienced over the years has shown that once the socialist transformation has been completed, the socialist basic system with public ownership as the main body established, and a socialist society formed, state capitalism as a transitional economic system would complete its historical mission and withdraw from the historical stage.

The socialist economic system with Chinese characteristics and the socialist market economic system with Chinese characteristics have brought into play not only the strengths of the market economy but also the advantages of the socialist system.

It has realized the proper combination of the government and the market, fairness, and efficiency, development and stability, and autonomy and openness, has promoted sustained and sound economic and social development, and has made great achievements that have attracted worldwide attention, benefiting all Chinese people and making important contributions to the development and progress of mankind.