E. P. PIVOVAROVA

Doctor of Economics

Market transformation Keywords: theory of socialism with Chinese characteristics, correlation of theory and practice, "three-step" modernization strategy, social justice

In the last two decades of the 20th century, the economic science of the People's Republic of China has been actively rethinking the entire body of knowledge about the laws of social production and distribution of material goods at various stages of human society development. The result of this reinvention was a market transformation, during which China made a decisive departure from the traditional norms of the socialist economic system based on public ownership of the means of production.

In the interests of developing the productive forces and improving people's lives on this basis, not only individual but also private farms were allowed, and distribution of both labor and capital was introduced. Instead of the previous planned production, a market economy regulated at the macro level was being formed. Over the years of reforms, China has created a "mixed economy", which is called" socialism with Chinese characteristics", because this economy does not fit into either classical or" NEP socialism", but the idea of"social control over production" is present in it as a necessary component.

"TWO HISTORICAL LEAPS"

According to party documents and Chinese scholars, since its formation in 1949, the PRC has followed the path of "combining Marxism-Leninism with the real reality of China", during which "two historical leaps" took place, which became "two important theoretical achievements" in the country. The first achievement includes the theoretical principles and results of the experience of the Chinese revolution and its subsequent construction, associated with the name of Mao Zedong. To the second - the" theory of building socialism with Chinese characteristics", the main creator of which is considered Deng Xiaoping. All this together is called "the fruits of the practical experience and collective wisdom of the party and the people." ¹

The fundamental differences between the socialism predicted by the founders of Marxism-Leninism and real life have led Chinese scientists to conclude that the goal of socialism, which consists in the self-realization of workers and social justice, is, first of all, an ideal. It has been longed for from generation to generation, but the transformation of socialism from utopia to science, and then into reality, is a long process that is currently very far from complete.

In an attempt to move forward in this direction, Chinese economic scientists, relying on the practical experience not only of the previous development, but also on the results obtained during the reform of the economic system, have put a whole series of propositions of the political economy of socialism in a new way. Based on them, they first outlined the path that the PRC should take to reach the modern level of civilization, and by the turn of the XXI century they developed their own theory of "building socialism with Chinese characteristics".

In the first decade of the twenty-first century, the People's Republic of China actively worked to improve all the qualitative parameters of socio-economic activity in the country in order, as noted at the 17th CPC Congress in 2007, "to deeply understand the new problems and new contradictions that may stand in the way of our development and with full effort to open the broader horizons for the development of socialism with Chinese characteristics " ².

When asked whether the science of social development, in particular political economy, is a practical science, thinkers of various times and trends give ambiguous answers.³

So, according to the English economist John Keynes, " the ideas of economists and political thinkers are much more important than people usually think. In reality, they are the only ones who rule the world, argued the founder of one of the leading trends in modern economic thought. - Practitioners who consider themselves completely unaffected by intellectual influences,

they are usually the slaves of some economist of the past. The madmen in power ... derive their extravagant ideas from the writings of some academic scribbler who wrote a few years earlier. " ⁴

The Swedish economist Gunnar K. Myrdal, who was able to get a much closer look at the experience of the development of two social systems than his predecessors, wrote in 1968: "If economic science has ever managed to pave the way to new perspectives on its own initiative, it has happened very rarely... All major changes in economic theory... they were reactions to changing political conditions and opportunities. " ⁵

Considering in the early 80's the problem of finding ways to transform the socialist economy in order to increase its efficiency, the outstanding Hungarian economist J. Kornai reasoned as follows: "Economists who concentrate their efforts on developing operational proposals and practical action programs planned for immediate implementation fully deserve respect. Their work is needed, and reform policies require their participation. They can help ensure that changes are better thought out and that international experience is better used...

Probably, the work of a theorist working in the field of fundamental research also has short-term practical benefits: the results of its analysis can deter frivolous figures from spectacular, but practically useless or simply harmful steps, and can cool and dispel excessive expectations that first create illusions and then disappointment. In addition to this thankless but useful "sobering" function, fundamental research and theoretical analysis can sooner or later, through many thorns and with great delay, help to rethink the existing situation and, ultimately, contribute practically to the development of society. " ⁶

A NEW VISION OF THE RELATIONSHIP BETWEEN THEORY AND PRACTICE

Summing up the results of the first decade of economic reform in 1988, Liu Guoguang, vice-president of the Chinese Academy of Social Sciences, acknowledged that in the pre-reform period of China, the spirit of "reliance on practice" has faded, while "reliance only on books" has increased. As a result, he stressed, economic work has become just a tool for interpreting current policies. In his opinion, this was one of the most important reasons for the immobility of theoretical economic research in the country until the 3rd plenum of the CPC Central Committee of the 11th convocation (December, 1978). The ideological guidelines of the plenum, calling for "liberating consciousness, extracting truth from facts...they played the role of an easterly wind for Chinese economic scientists", as a result of which "economic science gradually began to get rid of the fetters of dogmatism, turned back to reality and, immersed in it, posed new problems found in the practice of reform and the policy of openness"⁷.

In 1997, at the end of the second decade of economic reform, while emphasizing "the exceptional importance of theory and its guiding role," the 15th Congress of the Communist Party of China stated that only a theory that "invariably and strictly relies on objective facts"can be scientific.⁸

At the 17th CPC National Congress (October 2007), describing the path taken by the PRC in 30 years of reform, Hu Jintao, General Secretary of the CPC Central Committee, emphasized that " Marxism shows its powerful vitality, creative power and contagiousness only when it connects with the specific realities of a particular country, develops in step with the times and lives on one fate with the people " ⁹.

The economic reform in the PRC was based on the conclusion that when determining the strategy of socio-economic development, one should proceed "not from subjective wishes, not from certain foreign models, not from dogmatic interpretations of certain provisions of Marxist works", but be guided by the principle "practice is the criterion of truth"¹⁰. In this sense, the Chinese experience refutes the above-mentioned opinion of J. M. Keynes and offers a new perspective on the role of theory and practice than that of J. Kornai, namely, the "breakthroughs" made on the basis of practice in the economic theory of socialism allowed the PRC in rethinking socialism to significantly reduce the period of search and "birth pains", which in some cases took up Eastern European countries for several decades ¹¹.

Pursuing purely pragmatic goals - increasing the economic power of the state and achieving the modernization of industry, agriculture, defense, science and technology - the PRC enters the market by "soft means", without major social losses. There was no collapse in price liberalization, no hyperinflation, no deterioration in the financial situation of the population, or the destruction of its social security factors.

Calling the development of productive forces a central task and at the same time a criterion for evaluating economic policy, the Chinese leadership managed to solve this problem, first of all, by reorienting its efforts to the production of consumer goods and services, focusing them on solving employment problems, as well as on improving the quality of employees as the main productive force of society.

KEY FEATURES OF THE CHINESE REFORM

In our opinion, the main features of the Chinese reform that contributed to significant socio-economic progress in the country were the following::

First, the PRC did not spend much effort destroying and criticizing the past, but focused on creating a new one.

Secondly, the Chinese reform immediately turned to the needs of the population. Tasks of providing it with food and consumer goods

they became the main ones in the activities of newly created economic structures. This provided national support for the reform even at its first stages.

Third, after studying the existing domestic and foreign experience, the country's leadership came to the conclusion that it was necessary to proceed from the peculiarities of their country and resolutely embarked on the path of "building socialism with Chinese characteristics." Such an approach required, first of all, serious consideration of such a fundamental initial factor as the large population with extremely limited resources of the country.

Fourth, China did not have a landslide of liberalization, and the main method was a gradual, experimentally tested advance to the market, a transition from small to large, from private to general, a gradual but decisive expansion of the scale of reform and deepening it. This method has received the figurative name "crossing the river, feeling for stones".

Fifth, the creation of market entities was carried out in the PRC not by destroying existing state structures, but mainly by filling in existing gaps, i.e. from the first steps, the reform worked to reduce the country's economy's deficit. For these purposes, not only domestic reserves were mobilized, but also foreign capital was actively attracted.

Sixth, by stimulating economic initiative at the micro level, the Chinese leadership did not let macro-control out of its sight and took additional measures to strengthen such control during periods of dangerous growth of unbalanced economy.

Seventh, the practice of the first years of the reform showed that the most natural way to market is the development of various types of farms (collective, individual, private, joint Chinese-foreign). This approach not only ensured the rapid growth of market participants, but also, changing the structure of the national economy by ownership, adjusted the structure of investment and production, bringing it as close as possible to the real needs of the people.

Speaking about the social consequences of market transformations in the PRC, we should refer to the initial positions and development trends. The initial positions are the experience of socialism with strict administrative restrictions on economic activity, and at the same time with extremely important social guarantees for a person - providing a job, a living wage, education, etc. All this comes into collision with the laws of the market economy, which consist in the fact that the efficiency of management is achieved only in conditions of competitive struggle, the displacement of the weak by the strong and the most capable. Therefore, in the period of initial accumulation of economic power in countries moving to a market economy, when the problems of social justice are relegated to the background, certain losses of previous social guarantees are inevitable. As a consequence, the degree of social protection of workers decreases in the sense in which it was given by the previous experience of socialist construction (primarily through public consumption funds).

While recognizing the inevitability of certain social losses during the transition to the market, one cannot help but wonder about their magnitude and justification. Obviously, we can only speak of the latter to the extent that the social payment made during the reform process is comparable to the achievements in improving the efficiency of production, which ultimately serve to increase the people's welfare. The practice of economic reforms in the former socialist world provides various examples.

The People's Republic of China, following the path of gradual introduction of market principles into the economy, has achieved that the social payment is feasible for the population and comparable to the actual economic progress for which the transition to a market economy is being carried out.

The 13th CPC National Congress in 1987 emphasized that economic progress should not be achieved at the expense of the population. "Everything that is favorable to the development of the productive forces corresponds to the fundamental interests of the people, and therefore, one might say, is dictated by socialism and allowed by it." ¹²

This approach absorbed all the ambiguity of the social consequences of economic progress achieved, including through the introduction of new mechanisms that were not typical of the previous economic system. He also pointed out that although the essential characteristic of socialism always implies social protection of workers, this protection in practice can only be achieved on the basis of a high level of development of production. And, finally, most importantly, this security does not automatically follow the level of economic development.

Therefore, the preservation of this essential characteristic in the context of economic progress achieved by any possible means requires a system of measures aimed at using the fruits of the progress achieved in such a way that the actions taken correspond to the fundamental interests of the working people. In this sense, by focusing exclusively on the development of the country's productive forces at the XIII CPC Congress, the Chinese leadership did not make social advances, and improving the people's lives was meant as a possible consequence, not as a task of the present time.

SOCIAL JUSTICE AS A STRATEGIC OBJECTIVE OF ECONOMIC DEVELOPMENT

The economic potential accumulated over the years of reform allowed the leadership of the People's Republic of China to introduce the idea of social justice as one of the strategic tasks of building socialism with Chinese characteristics in the early 1990s. At the fourteenth Congress of the Communist Party of China in 1992, the question of the fundamental tasks of socialism, along with the development of productive forces, included the task of

"creating an ultimately prosperous life for all." The wording of the assessment of the government's performance has also been revised: "The criterion for evaluating the correctness and success of work in a particular field is essentially whether it benefits the development of the productive forces of socialist society, the growth of the total power of the socialist state, and the improvement of the standard of living of the people."¹³

The new program proposed at the fourteenth CPC Congress to accelerate the reform process, expand external relations, and modernize the country "preserved the face" of socialism by assuming the following::

- dominance in the multi-layered structure of the economy of public property (state and collective), supplemented by individual, private and state-capitalist sectors;

- support and increase efforts to develop areas that meet the vital needs of the population and their social protection;

- in the distribution system, preference was given to the distribution of labor, supplemented by other forms, taking into account the principle of fairness;

- the use of various regulatory levers in order, along with concern for efficiency, to "sensibly increase the income gap, at the same time prevent polarization, and ensure the gradual realization of universal prosperity"¹⁴.

History of the development of human civilization in the XX century. It shows that real progress in society was achieved only when effective economic development was combined with a policy of social protection of the population.

So, already in the first half of the 20th century, the developed capitalist world, in order to prevent destructive social revolutions, went to the previously unthinkable redistribution of wealth between labor and capital in favor of labor, successfully complementing its own idea of an effective market economy with the idea of the need for social protection of workers.

At the end of the twentieth century, the socialist world, clearly realizing that it had lost the competition with capitalism in the development of productive forces, directed its efforts to create market relations that did not previously fit into socialism, seeing in this the only possible and most effective way to create a real material basis for ensuring social support for workers. Unfortunately, this experience was not successful everywhere. The most fruitful economic reforms were in those countries where the positive developments of both market and planned economies were used in the course of transformation.

By the beginning of the 1990s, the PRC had essentially developed an approach that was reflected in the state's economic policy, in which the idea of the efficiency of the market economy, borrowed from capitalism, was combined with the idea of social protection of the population, taken from socialism. Almost all new ideas about the construction of socialism in the PRC were associated with the task of eliminating the country's economic backwardness and poverty of the nation.

For this purpose, in the process of reforming the economic system, the PRC abandoned thinking in terms of class antagonism and very gradually, but openly and legally, allowed the formation of a macro-regulated market economy, a pluralistic structure of ownership and distribution within the socialist state, setting aside for their existence, in fact, an unlimited period of time.

Describing the results of the country's" three-step "modernization strategy at the 17th CPC Congress in October 2007, Hu Jintao noted:" Our economy, once on the verge of collapse, now ranks fourth in the world in terms of overall quantitative indicators, and third in terms of imports and exports. The people who lived in conditions of lack of clothing and food have generally reached average prosperity, the number of people in need in the village has decreased from more than 250 million to more than 20 million. The success of political, cultural and social construction has attracted worldwide attention. The development of China has not only enabled the Chinese people to confidently embark on a broad path leading to prosperity and prosperity, but has also made a huge contribution to the development of the world economy and the progress of human civilization. " ¹⁵

THE THEORY OF SOCIALISM IN ITS CHINESE INTERPRETATION

Today, the leading ideology of the CCP, along with Marxism-Leninism and the ideas of Mao Zedong, is the theory of building "socialism with Chinese characteristics". It is known not only for the name of the" architect and conductor "of market reforms in the country, "Deng Xiaoping theory", but also" Marxism of modern China", or"combining Marxism with the practice of today's China and the specifics of the era".

Arguments for the validity of such a conclusion, in our opinion, can be the following::

- first, inheriting the rational ideas of its predecessors, this theory at the same time broke the existing stereotypes and took the "three utilities" as the main criterion for evaluating any activity - whether it benefits the development of productive forces, whether it strengthens the total power of the state, whether it helps to raise the standard of living of the people;

- secondly, instead of the slogan "take up the class struggle as a decisive link in the work", economic construction was put in the main place;

- third, and this is, in our opinion, the most important thing, is that conclusions about the ways of further development were made not on the basis of already existing formulas and ideas (whether Marxist-Leninist, classical bourgeois, Keynesian, neoclassical, institutionalist or any other), but on the basis of an analysis of the changed and new environment. The practice continues to change, both in China and around the world.

In this sense, Chinese economics followed the classical, but practically never, except during the NEP period in Russia, implemented the recommendations of Marxism-Leninism

- do not be afraid to draw independent conclusions from new, unforeseen, but "indisputable" facts of reality.

In the course of theoretical and practical research, Chinese scientists significantly changed the previous ideas about socialism during the years of reform. "Socialism with Chinese characteristics" in many respects does not coincide at all with the model of socialism outlined by the classics of Marxism-Leninism.

Describing the model of "socialism with Chinese characteristics" against the background of the entire historical experience of the development of economic thought, we can conclude not only about the significant evolution of the ideas of socialism in the Chinese interpretation, but also about its significant approach to the theories of "convergence", "mixed economy", and "institutionalism"that grew up on the evolutionary basis. Despite all the differences in these theories, they are all united by the idea of bringing the two social systems closer together and the need for "social control over production".

The analysis shows that the socio-economic system, which is now called "socialism with Chinese characteristics" in the PRC, is a convergent "mixed economy" in its essence. An economy of this kind is characterized by the coexistence of productive forces that are very diverse in their level of development, types of farms that are different in their forms of ownership, and their corresponding relations in the production and distribution of material goods. At the same time, the adoption of the idea of "three representative offices", which expands the "social support" of the country's leadership, brought the political superstructure into a certain correspondence with the "multi-color" basis. Finally, and most importantly, "social control over production" is implemented as a necessary condition for creating a market economy in a populous and economically backward country.

One of the most important and essential characteristics of "socialism with Chinese characteristics", the XVII CPC Congress called the need to ensure "social harmony". For the Chinese people, who have already achieved a marked improvement in their quality of life during the years of market transformation, such a definition is a factor that mobilizes them to work to mitigate and, if possible, eliminate what causes tension and can undermine social stability in Chinese society. This means, first of all, addressing the issues of employment and unemployment, preventing the deepening of property differentiation and, moreover, preventing "polarization" in society, reducing and then eliminating poverty.

It is characteristic that the attention and efforts of the Chinese leadership are focused on solving these most painful problems for the country today. Issues of priority assistance to the most disadvantaged segments of the population and creating additional jobs as the main way to improve the well-being of the entire people became central to the annual sessions of the NPC. It was in this direction that the expenditure items of the state budget were adjusted even in the context of the global financial and economic crisis.

Subsidies from the central budget for new employment continue to grow annually. At the first session of the National People's Congress of the 11th convocation in 2008, reporting on the work done by the government, Premier Wen Jiabao said that over the past five years, 51 million people were employed in the country's cities, the unemployment rate was kept within 4.6%, and the real incomes of urban and rural populations increased by 1.8 and 1.7, respectively twice.

Summing up the results of the employment policy at the 2010 NPC session, Wen Jiabao called it "more active" than in the past and characterized by "increased responsibility of the government itself for stimulating employment". In 2009, 59% more funds were allocated from the central budget for employment than in 2008, a series of measures to ensure employment was launched, and jobs for socially useful purposes were created through many channels.¹⁶

At the 4th session of the National People's Congress of the 11th convocation held in March 2011, describing the development of the national economy of the People's Republic of China during the 11th five-year plan (2006-2010), Wen Jiabao stressed that "the steady harmonization of economic and social development was based on the improvement of people's life", and "in the development of it was given to employment." As a result, in 2010 alone, the number of people employed in cities and towns increased by 11.68 million, while the real per capita incomes of urban and rural populations increased by 7.8% and 10.9%, respectively.¹⁷

For the construction of a "harmonious socialist society with Chinese characteristics", the leaders of the PRC are given a long time, during which "several dozen generations of people"should be replaced. At the same time, it is meant that today a "harmonious socialist society" can only be an inspiring bright dream, to which it will (or at least can) be achieved. strive for the Chinese people.

¹ People's Daily, 22.09.1997.

² People's Daily, 25.10.2007.

^{Bukharin N. I.} 3 Selected works. Politizdat, 1988, p. 1.

^{Keynes J. M.} 4 Izbrannye sozdaniya [4 Selected works]. Moscow, Ekonomika Publ., 1993, p. 518.

^{Myrdal G.} 5 Asian Drama. Research on the poverty of peoples. New York-London, 1968, vol. I, p. 9.

^{Kornai Ya} 6. Moscow, Nauka Publ., 1990, p. 24.

⁷ PRC on the path of Reforms, Moscow, Nauka Publ., 1989, p. 32.

⁸ People's Daily, 22.09.1997.

⁹ People's Daily, 25.10.2007.

¹⁰ People's Daily, 22.09.1997.

¹¹ Jingji yanjiu, 1988, N 11, pp. 11-12.

¹² Proceedings of the XIII National Congress of the CPC. Beijing, 1988, p. 79.

¹³ People's Daily, 21.10.1992.

¹⁴ Ibid.

¹⁵ People's Daily, 25.10.2007.

¹⁶ People's Daily, 16.03.2010.

¹⁷ People's Daily, 15.03.2011.

Permanent link to this publication: