Economic stimulus in China and the U.S. (Part 2)

(Part 2)

China has announced a 2-year, $568 billion program to deal with economic and social problems caused by the global economic crisis. The program includes investment in education and health care, environmental protection, housing, highways and rail transportation, and other infrastructure projects. China’s plan, and the ways in which it helps workers in the U.S., were discussed last week in Part I of this article.

The contrast between China’s approach and that of capitalist countries was highlighted in side-by-side articles on China and India in a recent Wall Street Journal. In India, “the credit crisis is delaying building by crimping the flow of cash for roads, ports and power plants,” the Journal reports. “Billions in infrastructure projects could be in jeopardy…. Interest rates on project financing have soared, banks are reluctant to lend, and investors are sitting on their cash. But the Indian government can’t afford to compensate with a huge infrastructure-spending program like China’s… Countries around the world are shutting down such projects…”

What accounts for the difference between China and India – and most capitalist countries? China and India are both large, populous nations that, since World War II, have been trying to emerge from a legacy of colonial and imperial domination by foreign powers. China is the product of a socialist revolution, while India has remained capitalist, fully embracing the unregulated, neoliberal model of global capitalism that came to dominate most of the world – including the United States — in the 1990s.

The economies of China and India are organized in fundamentally different ways, to serve fundamentally different interests. In all economies, factories, stores and other enterprises produce a surplus — their income from selling goods or services is greater than their expenses. In capitalist countries, most of this surplus goes as profit to the shareholders, bondholders and top executives, who use it as they see fit. But in China, which was formed by the socialist revolution, the state controls most of the surplus, and can direct it to meet human needs, including for jobs, as China’s latest stimulus package shows.

By contrast, in capitalist countries the state serves the interests of the capitalists, who control most of the surplus created by workers. The emphasis of the state and capitalists is on protecting profits, and the exploiters’ power.

Another Wall Street Journal article lays it out. “China’s banks, still largely under state ownership, will be expected to play their part in supporting the Chinese economy, rather than pulling up the drawbridge, as their foreign counter-parts have been doing... If that means earnings are pinched, few in Beijing will mind.” Contrast that with the Wall Street banks that are using bailout money to maintain investor dividends and executive salaries, instead of supporting the U.S. economy (and people) with student, consumer and business loans.

“Can China save the world?” This is the question recently posed on the cover of The Economist. The short answer is – No. But together, China and the workers of the world, our parties and unions, can “save the world,” both socially and environmentally, and we share a common interest in doing so. By contrast, the capitalists’ only interest is their profits and power, regardless of the cost to humanity.

The unfolding capitalist crisis at bottom is a crisis of “overproduction” (more, much more has been produced than the capitalists can sell at a profit) and simultaneously a crisis of unmet human needs, even for food and water. The crisis is pointing to tremendous deepening of poverty, political breakdowns and wars.

But the unity and common struggle of workers and our organizations, including the Chinese and other states formed by workers’ revolutions, Communist and workers’ parties, and trade unions internationally, can “save the world” — and bring extraordinary liberation to all of humanity.