The Root Cause of China's
"Second-Largest Wealth Gap in the World"
Scholars' Column, Renjing Net (archive). Translated by Vero Publishing.
I recently read an online article signed "Kindness and Truth," titled "China's Wealth Gap Is the Second-Largest in the World; Consumption-Led Growth Runs into Difficulties" (hereafter "the 'Widening' article"; see the appendix). The article is short and makes two main points. First, an extremely important social problem in China today is the further widening of the gap between rich and poor: the Gini coefficient has reached 0.74,[1] making the gap the second-largest in the world (after South Africa), and the article briefly lists some facts. Second, it argues that the root cause of this second-largest gap is official corruption, and that the remedy is "to root out corruption in China, introduce a system for officials to disclose their assets as soon as possible, and set the country on the road of democracy and the rule of law as quickly as possible."
On reading it, my first reaction was to agree with the objective fact the article describes: the widening gap between rich and poor in China today. I recall seeing material more than twenty years ago putting China's Gini coefficient between 0.4 and 0.5; today, as "reform and opening up" continues to deepen, it has actually risen to 0.74. I cannot verify whether this figure is entirely accurate, but from observing social phenomena I can certainly feel that over the past twenty years the gap has not narrowed but kept widening. My second reaction was that its analysis of the causes is too superficial and simplistic. Philosophy has the paired categories of cause and effect: every phenomenon, as an effect, must have its objective cause. The "Widening" article starts from the effect, a Gini coefficient of 0.74 and second place in the world, and goes on to discuss its cause. It regards the root cause as "official corruption," so the path, means and method of solving it is "to root out corruption in China." And how is corruption to be solved? It proposes two measures: an asset-disclosure system for officials, and setting the country on the road of democracy and the rule of law. This probably represents the understanding and view of a great many people in society! I do not think the author's view is wrong, but this understanding is far too simplistic and superficial. Corruption is indeed one of the causes, but corruption too is a phenomenon, not the essence, not the root cause. Building on the "Widening" article, I will go on to reveal the deeper, or root, cause.
Materialist dialectics holds that a phenomenon as an effect, especially a complex one, often has many causes. A phenomenon such as the widening gap between rich and poor across a whole society certainly has many causes, but among them there is certainly a principal or root cause. I will discuss my understanding of the problem in terms of that principal or root cause.
A widening gap between rich and poor shows, first of all, that there is a problem with a society's system of distribution. The total amount of social wealth, or GDP, depends on the level of development of the productive forces, but the way social wealth is distributed depends not on the productive forces but on the relations of production and the political system. Historical materialism holds that the relations of production mean, first, who owns the means of production; second, the relations among people in the production process; and third, the distribution of products. The power to distribute products depends on who owns the means of production. Under capitalist private ownership, distribution is according to capital, and the social wealth created by working people is appropriated by a minority. Under private ownership, a widening gap between rich and poor is inevitable. The superstructure of a society based on private ownership serves the economic base of private ownership, so the powerholders at every level of the superstructure inevitably receive a considerable share of surplus value from the bourgeoisie they serve. Collusion between officials and business, between officials and capital, is a universal phenomenon in private-ownership societies. That is precisely why the Communist Party had to lead the people in overthrowing the old system of private ownership and in establishing a socialist economic system of public ownership and its superstructure. Under socialist public ownership, the means of production are in the hands of working people, owned either collectively or by the whole people, and products are distributed according to work. But distribution according to work is itself a bourgeois right. As Marx pointed out in the Critique of the Gotha Programme, because of differences among workers in ability, family size, region, environment and so on, there are bound to be differences in the distribution of their products and wealth; this is inevitable in the historical stage of socialism. But there will certainly never be excessively great disparities in personal wealth or severe polarization.
Yet we still call ourselves a country of "socialism with Chinese characteristics" led by the Communist Party. After Mao Zedong's death, in the name of "reform and opening up," China vigorously pursued, to varying degrees, a reform direction of privatization and marketization. As a result, the economic system as a whole no longer has socialist public ownership as its mainstay but private ownership, and the superstructure beats the gongs and waves the flags to clear the way for this reform direction. However many beautiful phrases certain people in power and court scholars shout, such as "Marxism," "socialism," "politics," "people-centered" and "common prosperity," the reality is that the country has already become capitalist. That is why the people say that "socialism with Chinese characteristics" is in essence "capitalism with Chinese characteristics." The capitalist system of distribution is distribution according to capital. That is why there have emerged a huge number of contemporary Chinese capitalists, large and small, of the Xu Jiayin type, and countless corrupt officials and capitalist-roaders within the Party who collude with business. Certain people in power have even awarded these contemporary capitalists such honorary titles as "model worker" and drawn them into people's congresses, CPPCC committees and other organs of power at every level, consciously or not protecting and shielding the exploitation and various illegal acts of figures like Xu Jiayin. A few years ago, the Supreme People's Court and the Supreme People's Procuratorate issued regulations and statements protecting private entrepreneurs who had broken the law.[2] Does this not show that the powerholders of the superstructure have degenerated and changed color?
It is true that over the past few decades social wealth has increased enormously. When Hu Jintao's Scientific Outlook on Development was being promoted, it was said that the fruits of development would be enjoyed by the people. But the reform direction of privatization and marketization inevitably leads to distribution according to capital and according to power. Xu Jiayin's Evergrande Group alone owes debts of 2.5 trillion yuan,[3] not counting the wealth he consumed and squandered over decades. Xu Jiayin's life of luxury was more decadent and depraved than that of China's feudal emperors, even than that of the "four great families" of the Chiang Kai-shek era.[4] And that is just one Xu Jiayin. What of all the entrepreneurs, real estate developers and capitalists who grew rich by illegal means, and the bourgeoisie within the Party who took tens or hundreds of millions in embezzlement and bribes? Is all their wealth not plundered, seized and squeezed from the blood and sweat of the great majority of ordinary working people? Former Premier Li Keqiang said publicly that six hundred million people in Chinese society have an average monthly income of less than 1,000 yuan.[5] Is this the people enjoying the fruits of reform? In a "socialist" country won through the sacrifice of countless revolutionary martyrs, the gap between rich and poor is greater than in ordinary capitalist countries, perhaps even greater than in old China. As an ordinary Communist Party member, I feel boundless shame.
The root cause of so great a gap between rich and poor is the reform direction of privatization and marketization. And the root cause of privatization and marketization is an erroneous ideological and political line. As Chairman Mao said, whether the ideological and political line is correct or not decides everything.
"Reform and opening up" began with the great debate on the criterion of truth. "Practice is the criterion of truth" is indeed a basic Marxist view. But that debate made two fundamental errors. First, practice is the fundamental and ultimate criterion of truth, not the "sole" criterion; the idea of a "sole criterion" completely excluded the important role of theories already proved correct in practice in testing whether new knowledge is true. Second, the practice that tests truth is not an individual's subjective feelings and experience, a list of phenomena, a sum of examples or talk of minor details, but the people's struggle for production, class struggle and scientific experiment; it is what Lenin called the thing-in-itself. I have written many articles assessing that debate and will not repeat myself here. Because the initiators and organizers of that debate misinterpreted this extremely important idea of Marxist philosophy, and on that basis also misread the "practice" of the Mao Zedong era at the level of phenomena and minor details (for example, the enormous achievements of economic construction in the Mao era were interpreted as "the national economy on the brink of collapse"), the conclusion they reached, a fundamental repudiation of Chairman Mao's theory and practice, was wrong. And the series of so-called "innovative" theories and practices, such as "reform and opening up," put forward on the basis of repudiating Chairman Mao's basic theory and practice, were wrong too.
Marxists have never denied socialist "reform and opening up." But such "reform" is the self-perfection and self-adjustment of the socialist system of public ownership, not the fundamental overturning of socialist public ownership, distribution according to work and the planned economy. And such "opening" is opening on the basis of self-reliance, not the line of "building is not as good as buying, and buying is not as good as renting." The cancellation of the Yun-10 airliner was the inevitable result of this mistaken line of "opening," which abandoned the line of self-reliance. In fact, socialist "reform and opening up" had already begun in Chairman Mao's time; Chairman Mao was the true architect of China's "reform and opening up." The twisted and mistaken "reform and opening up" of that great personage, guided by mistaken theory, not only led to the reform direction of privatization and marketization but is also the root cause and deep source of the widening gap between rich and poor, ever-worsening official corruption, a steadily deteriorating social ethos, the inversion of right and wrong, beauty and ugliness, good and evil, and other social phenomena.
We have criticized that so-called "great debate on the criterion of truth," but we have by no means repudiated the Marxist idea of the criterion of truth. Today we should uphold, with justice on our side, the idea that "practice is the criterion of truth," this scientific theoretical weapon of Marxism, and use today's objective reality of practice to test whether today's theory is correct. A certain great personage once proposed that the essence of socialism is "to liberate and develop the productive forces, eliminate exploitation, eliminate polarization, and ultimately achieve common prosperity."[6] Given the objective fact that China's wealth gap, by Gini coefficient, has leapt to second place in the world, has exploitation been eliminated? Has polarization been eliminated? Has common prosperity been achieved? Does this iron-clad objective result, this objective fact, prove the "innovation" of the so-called "theory of the essence of socialism" and the "theory of socialism with Chinese characteristics" to be truth or fallacy? The great majority of the people, from objective facts they have seen and felt for themselves, have proved the truth of Chairman Mao's theory and practice of continuing revolution, and proved that the innovative theories "with characteristics" are not truth but error, a departure from and betrayal of Marxism-Leninism and Mao Zedong Thought!
Translator's Notes
1. The Gini coefficient of 0.74. The figure most likely refers to the distribution of wealth, not income. China's official income Gini coefficient has stood at about 0.46–0.47 in recent years, while independent estimates of wealth inequality run around 0.7. The author himself notes that he cannot verify the figure.
2. Protecting private entrepreneurs. Probably a reference to the 2016 Opinions of the CPC Central Committee and State Council on improving the protection of property rights, and to related guidelines from the Supreme People's Court and the Supreme People's Procuratorate, which called for correcting wrongful cases against entrepreneurs and treating irregularities from the early reform period leniently.
3. Evergrande's debts. Evergrande's total liabilities were reported at about 2.4–2.6 trillion yuan when the group defaulted in 2021–2023.
4. The "four great families" (四大家族). The Chiang, Soong, Kung and Chen families, who dominated the finances of Nationalist China.
5. Li Keqiang's remark. Made at the premier's press conference after the National People's Congress session in May 2020.
6. Deng Xiaoping on the essence of socialism. From his remarks during the 1992 southern tour.