The short of it is that the USSR and China carried out opposite plans of economic reform. The USSR sought to introduce private property into its economic system, with hopes of engineering a society of free labourers and capitalists in the western model. The Chinese on the other hand introduced capitalist and market practices into their economic system, without changing the property model directly. The result is that in the USSR only the well connected were in place to seize the opportunities of the new system, to hoard property and to become the new oligarchy. Meanwhile in China the government and the oligarchy stayed separate, if interdependent, because property and power hierarchies were more or less unchanged.

Think of a village built around collective land in both countries. For a number of reasons that village is just not living up to its potential. Maybe the central government is fucking stuff up with re-investment, maybe the land is too fragmented to be productive at a certain technological level, maybe the people there just don’t wanna farm. Whatever it was something had to be done. So in China the property model was more or less unchanged. The state owns the land and the people possess it. Only instead of old political practices of setting up supply chains and quotas, the chinese bureaucracy introduced market driven levers to incentivize and motivate the labourers. Inputs and outputs relating to those chinese farms were subject to price mechanisms rather than direct resource allocation. In the USSR the village was privatized, ostensibly so that the locals would then own their land and become capitalists, which therefore meant that capitalist practices would follow. Instead what predictably happened was that the bureaucrats themselves were the ones with capital and connections to seize those new private properties. Consolidations lent themselves towards oligarchy.

One cannot understate the role of foreign advisors in this process. It was western advisors who pushed for this sort of social re-engineering in the USSR, and it was also western advisors who pushed for financial liberalization. The way Jeffrey Sachs describes it, the rapaciousness with which the oligarchs could seize wealth in the USSR was only possible because of the rule of law in the west - financial assets were stolen in the union and sent towards the west, to London. Where they were protected from justice. Meanwhile in China the chinese themselves were the ones inviting groups like the Carter Foundation to help reform the electoral system. The Chinese did not bring in westerners to tell them what to do economically or politically, they brought them in to get their input on achieving what they actually wanted to achieve all along.

Mind you, what I’m describing are broad theories and in some ways idealized versions of both the soviet and the chinese experiences. Just a quick look into that last statement I made and a chinese person might take exception to it: chinese elites did go to the west and learn economic theory there, so its not like the Chinese had total control and self determination on that front. And that’s true. Ultimately, what we can say is that the USSR and China took very different paths - former inspired by the US, the latter by Japan and Singapore - and that all political economies - capitalist or socialist - are a permanent exercise in change, transformation, social construction and so on. The Dengist adage is that all societies have markets, the world had markets before capitalism even existed and it is true. The moral economies of pre-capitalist Europe, for an instance, despised the very notion of free floating prices on a local level. So the logic goes that there’s no problem for a socialist economy to have markets as well. Only it doesn’t stop there: that socialist economy is, like all others, on a permanent struggle between political and economic power. Even theoretically, there has to be more or less liberal tendencies, periods and so on all the way towards communism.

China has a system where new, young management is trained to understand and take the reins from older functionaries (as well as rotating between semi-private business, state controlled industry, and local/regional governance for a more rounded understanding of how all three work and intermingle). The USSR… didn’t have that. Understanding of how the command economy functioned was largely kept to the generation that set it up. I don’t know how accurate this is, but I heard towards the end almost nobody was left who actually knew how or where the money was getting distributed.

There’s this TED talk from a while back kinda goes into it? The speaker is a venture capitalist, but his perspective on the matter is pretty unique. https://www.youtube.com/watch?v=s0YjL9rZyR0

Can’t say this was THE reason but one thing that struck me reading zubok’s Collapse book, 1 biography of deng and isabella weber’s “how china escaped shock therapy” was the totally deferential attitude of the soviet reform economist towards the western economists and their theories compared to the much more contested relations between chinese and western economists.

Zubok’s book shows the soviet economists completely buying into everything the western economists told them. While weber relates a reccuring event where western economists would sit chinese economists down in conferences and dictate to them what they should do, the chinese economists would silently listen, write stuff in their notes and go home, the western economists would then go home believing they had fully convinced the chinese. Then the next day the chinese economists would show up to the conference and dispute the ideas they listened to the day before, which would frustrate the western economists.

There was just simply more debate in the chinese case, Deng did not have as much power as gorbachev so even though he was at diffetent points pro-shock therapy, cautious reformers like Shen Yun also had the clout to frustrate those efforts

The Bretton Woods System failed 1971 and Nixon traveled to China 1972.

Not a complete answer, but a question like this shouldn’t forget the global context. As it is, the question implies, that the answer can only lie in the organization of national party politics or national economic politics. I agree, that these are important and this is still a great question. But missing the context would obviously be wrong.

developmental ability of capital

This is too abstract. It wasn’t just any capital, but huge amounts of US-Dollars from the global hegemon. They kept flowing in for decades in exchange for China saving US (and thereby global) capitalism after the gold standard failed. This was done by enabling the so called Walmart economy with “made in China”, the mountains of US national debt with China holding dollars and state bonds and indirectly the petro dollar system.

It’s a very different situation from the Soviet Union having to fight a cold war with the global empire to China becoming the main reason capitalism can live on and integrating into the world economic system as a vital part of it.

China continued to prop up global capitalism for decades. Every four to seven years a periodic crisis occurs and while production slumps in the imperial core, the continuous growth of China provides a solid rock for capital to lean on:

From 1989 to the 1990s, it fueled neoliberalism, allowing the outsourcing boom by becoming the low wage workshop of the world. We can’t talk about neo liberalism without talking about China. In 2001 China initiated a boom of foreign investment by joining the WTO and started to accumulate huge amounts of US-Dollars, propping up the national US economy and the global dollar system, by becoming the global engine of growth. When the whole system threatened to crash down burning, in the mortgage crisis of 2008/09, China alone acted anti-cyclical and initiated the largest ever stimulus program(relative to GDP). Commodity prices rebounded, saving many economies in Latin America and Africa (and Australia). Again during the COVID crisis, locking down hard and recovering quickly meant Chinas demand could rescue resource heavy economies.

Not making moral judgments here, just talking about economic facts. I’m all for multi-polarity, the fall of the US empire and also remain hopeful about the very peaceful, non hegemonic rise of the Chinese one. Also the main task of leftists in the imperial core is not to critique China, but to remember “the main enemy is at home”. To fight US and European imperialism where ever possible. But since this question was explicitly about comparing the Soviet Union with China, center of the discussion really should be the alignment with or against the global hegemon, who’s decisions have a big impact on who is allowed to rise and who isn’t.

I hope this discussion doesn’t devolve into normative arguments about whether this is seen as a betrayal (as maoists see it) or a brilliant (or the only viable) strategy. I find it more helpful to look at the big picture of the ebb and flow of capital and how it really is influenced by policy instead of the question what political leaders might have privately thought or intended.

China got material concessions for opening up as a market providing a large amount of educated labor in exchange for resources and the industrial capital it had long been starved of*, and became less isolated in general as the US started seeing it as an asset to exploit instead of a threat to crush. The USSR only got more hostility from the US for its concessions, and it alienated its allies as it abandoned them in the hopes of winning the US’s trust and cooperation (which it did not receive), and then it got looted and torn apart when it opened up instead of seeing any sort of material benefit.

China also didn’t make the absurd, unforced error of its ruling party declaring war on itself. Even when the liberal bloc came into power they didn’t start castigating figures like Mao and trying to tear apart the legitimacy of the CPC, they didn’t allow more extremist liberals to seize power from them, and they didn’t systematically undermine the CPC in material ways at the ground level. Gorbachev’s bloc on the other hand did all of those things, crippling the CPSU and empowering its enemies and then just passively letting Yeltsin coup the USSR.

* Further, while there were material decreases in the standard of living of the working class in the short term from the concessions to foreign capital the CPC made, these were outweighed in the longer term by the huge material benefit of actually getting access to industrial capital on the level needed to fully industrialize, and they were able to weather consistent violent unrest over material conditions until the communist bloc came back into power and started enacting huge anti-poverty programs that seem to have alleviated those tensions now.

I’m afraid I’m not going to respond with the same amount of effort (good post!) but one thought that does keep coming back to me is that if we’re going to reassess Dengism based on the current situation, maybe we have to reassess the cultural revolution too? An uncomfortable thought, but there you go

GOOD post, I am intrigued by this question now also.

https://www.amazon.ca/s?k=how+china+escaped+shock+therapy&hvadid=666108927116&hvdev=c&hvlocphy=9000434&hvnetw=g&hvqmt=e&hvrand=3363787468209721145&hvtargid=kwd-1210926190006&hydadcr=26085_13645140&mcid=b1d1e10c440c3378a13aa7ea3e64501d&tag=googcana-20

Here is the book that go into the subject. there some palace intrigue that happened in the Chinese politburo. Deng was actually the one who wanted to completely liberalize the country like what they did in the USSR. However, some Chinese economic specialists already saw that liberalization ravaging the countryside. Alongside some more “conservative” members of the CPC, they basically decided against the decision of total liberalization.

Fun fact, George Soros and the specialists he sent to China also decided to be against liberalization, their motivation was more centered around a total liberalization can cause chaos in the new global economic order as they kind of don’t mind the Chinese government running the country like a big factory.