Paper presented by Sitaram Yechury,at the International Symposium on World Socialism in the 21st Century) Sponsored jointly by the Institute  of Marxism-Leninism and Mao Zedong thoughts, Chinese Academy of Social Sciences October 21-24, 2002, Beijing

While facing the challenges of the latest imperialist machinations against the socialist countries and the renewed US imperialist aggressiveness against them in the post-September 11, 2000 world situation, the socialist countries have embarked on a  reform process, specific  to the concrete situation of their countries.  Particularly in the present situation where the international correlation favours imperialism with its virtual monopoly over capital and technology, the socialist countries are engaged in serious efforts at developing productive forces to consolidate socialism.  These have generated concern and debate amongst well-wishers of  socialism the world over.   While these reforms have led to rapid economic growth in some countries, like in China, new problems have also arisen. Let us discuss some theoretical and political  issues with specific reference to China. 

The triumph of the socialist revolution in Russia (and subsequently, following the defeat of fascism in the second world war, in the relatively less developed Eastern Europe; semi-feudal semi-colonial China; northern Korea; Vietnam and Cuba) did not and could never have meant the automatic transformation of the backward economies and low levels of productive forces into high levels (higher than that of capitalism) of socialised means of production.
For the purpose of our discussion, however, it needs to be noted that every socialist revolution, based on a concrete analysis of concrete conditions, worked out its approach towards developing rapidly the productive  forces.  How this can be done is  specific to the concrete realities faced by the specific revolutions, both domestically and internationally.
Lenin, himself, noted on the 4th anniversary of the October Revolution: "Borne along on the crest of the wave of enthusiasm, rousing first the political enthusiasm and then the military enthusiasm of the people, we expected to accomplish economic tasks just as great as the political and military tasks we had accomplished by relying directly on this  enthusiasm.  We expected — or perhaps it would be truer to say that we presumed without having given it adequate  consideration — to be able to organise the state production and the state distribution of products on communist lines in a small-peasant country directly as ordered by the  proletarian state. Experience has proved that we were wrong.  It appears that a number of transitional stages were necessary — state capitalism and socialism — in order to prepare — to prepare by many years of effort — for the transition to Communism. Not directly relying on enthusiasm, but aided by the enthusiasm engendered by the great revolution, and  on the basis of  personal interest, personal incentive and  business principles, we must first set to work in this small-peasant country to build solid gangways to socialism by way of state capitalism. Otherwise we shall never get to Communism, we shall never bring scores of  millions of people to Communism. That is what experience, the objective course of the development of the revolution, has taught us." (Lenin, Collected Works, Vol. 33, pp.58 emphasis added)
Further, he proceeds to state: "Capitalism is a bane compared with socialism.  Capitalism is a boon compared with medievalism, small production, and the evils of bureaucracy which spring from the  dispersal of the small producers. In as much as we are as yet unable to pass directly from small production to socialism, some capitalism is inevitable as the elemental product of small production and exchange; so that we must utilise  capitalism (particularly by directing it into the channels of state capitalism) as the intermediary link between small production and socialism, as a means, a path, and a method of increasing the productive forces." (Lenin, Collected Works, Vol. 32, pp. 350)
But, does this mean the restoration of capitalism?  To this Lenin answers quite candidly during the period of the NEP (new economic policy) that: "It means that, to a certain extent,  we are re-creating  capitalism.    We are doing this quite openly. It is state capitalism.   But state capitalism in a society where power belongs to capital,  and state capitalism in a proletarian state, are two different  concepts.  In a capitalist state, state capitalism means that  it is recognised by the state and controlled by it for the  benefit of the bourgeoisie, and to the detriment of the proletariat. In the proletarian state, the same thing is done  for the benefit of the working class, for the purpose of  withstanding the as yet strong bourgeoisie, and of fighting  it.  It goes without saying that we must grant concessions to  the foreign bourgeoisie, to foreign capital.  Without the  slightest denationalisation, we shall lease mines, forests and oilfields to foreign capitalists, and receive in exchange manufactured goods, machinery etc., and thus restore our own industry." (Lenin, Collected Works, Vol. 32, pp. 491)
To a certain extent, what we find in the post-reform socialist China is,  a reflection of the theoretical positions Lenin had taken regarding state capitalism during the NEP period.  The main question involved is that  of increasing the productive forces in a backward economy to a level that can sustain large-scale socialist construction. Lenin, during his time, on the basis of the concrete international and domestic situation, consistently endeavoured to rapidly bridge the gap between backward productive forces and advanced  socialist production relations.  The course of this Soviet history of socialist construction, however, took place under different historical circumstances.  Encirclement of the Soviet Union, the civil war, the preparations for the second world war by the fascist forces did not allow the Soviet Union a peaceful period necessary for a protracted period of transition towards the consolidation of socialist productive forces.  The pace of the socialisation of the means of production had to be hastened for the very survival of the socialism itself.  The fact that it did succeed in socialising the means of production through `collectivisation’, bore the brunt of fascist assaults during the second world war and decisively defeated them will go down as one of the most remarkable and liberating experiences of the 20th century.
In China today, what is being sought is to attain the conformity between the levels of productive forces and the relations of production under socialism.  The advanced socialist production relations cannot be sustainable at lower levels of productive forces.  A prolonged period of low levels of productive forces would give rise to a major contradiction between the  daily expanding material and cultural needs of the people under socialism and backward productive forces. The Chinese Communist Party (CPC) has concluded that if this contradiction remains unresolved, then socialism itself  in China would be under threat.
Following the political turmoil that took place during the cultural revolution and after the dethroning  of the `Gang of Four’ a serious introspection was begun by the CPC on political and economic issues.  In 1978, clearing confusion and incorrect understanding on many political issues and practices, the CPC adopted a comprehensive ideological line that  culminated in what they call `one central task and two basic points’.  `One central task’ is economic development, the `two basic points’ are adherence to the four cardinal principles (Marxism-Leninism and Mao Zedong; socialist road; people’s democratic dictatorship; and leadership of the Communist Party) and the implementation of reforms and open door policy.
Soon after the  initiation of the reform process, in a conversation with Kim Il Sung in  1982, Deng Xiaoping says: "In a country as big and as poor as ours, if we don’t try to increase production, how can we survive?  How is  socialism superior, when our people have so many difficulties in their lives?  The Gang of Four clamoured for `poor socialism’ and `poor communism’, declaring that communism was mainly a spiritual thing.  That is sheer nonsense!  We say that socialism is the first stage of communism.  When a  backward country is trying to build socialism, it is natural that during the  long initial period its productive forces will not be up to the level of those  in developed capitalist countries and that it will not be able to eliminate poverty completely.  Accordingly, in building socialism we must do all we can to develop the productive forces and gradually eliminate poverty, constantly raising the people’s living standards. Otherwise, how  will socialism be able to triumph over capitalism?  In the second stage, or the advanced stage of communism, when the economy is highly developed and there is overwhelming material abundance, we shall be able to apply the principle of  from each according to his ability, to each according to his needs.  If we don’t do everything possible to increase production, how can we expand the economy?  How can we demonstrate the superiority of socialism and communism?  We have been making revolution for several decades and have been building socialism for more than three. Nevertheless, by 1978 the average monthly salary for our workers was still only 45 yuan, and most of our rural areas were still mired in poverty.  Can this be called the  superiority of socialism? That is why I insisted that the focus of our work should be rapidly shifted to economic development.  A decision to this effect was made at the Third Plenary Session of the Eleventh Central Committee, (1978. Ed.) and it represented an important turning point. Our practice since then has shown that this line is correct, as the whole country has taken on an entirely new look." (Selected Works of Deng Xiaoping, Vol. 3, pp. 21-22)
It is essentially such an understanding that led to a theoretical conceptualisation of the primary stage of socialism. This in fact conforms to what Marx and Engels themselves had stated and what is accepted by all subsequent Marxists: that socialism is the transitory stage between capitalism and communism and hence constitutes the first stage of a communist society. The CPC however has gone a step further to formulate that within this transitory stage, there will be stages depending on the levels of productive forces at the time of the revolution. This was systematically  elucidated in the 13th Congress of the CPC. Basically, what it meant was that China, being a backward semi-feudal, semi-colonial  country at the time of the revolution, was at a stage where the socialist transformation of its economy will have to be conducted from very low levels.  The World Bank, in 1980 sent an investigation team to China which estimated that the per capita GNP in 1952 was US $ 50, even lower than that in India and only slightly more than one-fifth of that in the Soviet Union in 1928. In a country with the largest population in the world, the effort for a transformation into a modern socialist economy is, indeed, a  stupendous task.  The CPC estimated that this process would take atleast a hundred years from the time of the revolution to reach the stage of a modern socialist economy.  It is this process which they call `the building of socialism with Chinese characteristics’.
In order to achieve such a transformation, the CPC put forward another theoretical formulation that of building a socialist market economy. By now, it is clear that as long as commodity production exists, there would be a need for a market to exchange these commodities.  The CPI(M) at its 14th Congress noted in its Ideological Resolution: "It would be erroneous to conclude that under socialism the market will cease to exist.  So long as commodities are produced, the market exists.  The crucial question is not planning  versus market but which dominates.  Under socialism, market is one of the means for the distribution of the social product.  Centralised planning, utilising  the market forces and the market  indicators, will be able to efficiently develop the productive forces and meet the welfare demands of the people.  Therefore, ignoring  market indicators leads to greater irrational use of resources which will adversely affect the plan process itself".
What is sought to be created in China is a commodity market economy under the control of the socialist state where public ownership of the  means of production will remain  the mainstay; by which the CPC means "firstly that public capital predominates in total social capital; secondly, the state economy controls the economic lifeline and plays a dominant role in the national economy".  Through this, they seek to prevent the economic polarisation and growing inequalities created by private market economy and ensure the common prosperity  of the working people. 
As a result of these reforms, China over the last two decades has achieved tremendous successes. Material standards of living have  grown by leaps and bounds. Poverty levels have come down sharply. In health, higher education, scientific research and technology development, China has moved ahead at a commendable rate.  All these have been possible  not because China `broke from thee Maoist past’  but because  it developed on the solid foundations laid by the People’s Republic of China during the  first three decades of centralised planning.
However, new problems are also cropping up as a result of these developments.  They are mainly the growing inequalities, unemployment and corruption.  The CPC, cognizant of these dangers, is taking measures to tackle these problems. But the fact remains that with the current transformation  of the State owned enterprises, there is a net accretion to the unemployed every year. While the State maintains a minimum subsistence  allowance and offers re-training programmes for retrenched workers, unemployment is a serious problem.
The main question that emerges is whether these growing inequalities will take the form of the formation of an incipient  capitalist class? Lenin, while talking of State capitalism and emphasising the need to rapidly expand the productive forces, also warned of the risks to the socialist State that such a period of  transition will bring about.  Characterising the process of building state capitalism as a war, Lenin says: "the issue in the present war is — who will win, who will first take advantage of the situation: the capitalist, whom we are allowing to come in  by the door, and even by several doors (and by many doors we are not aware of, and which open without us, and in spite of us) or proletarian State power?" (Lenin, Collected Works, Vol. 33, pp 65)   He proceeds further to state: "We must face this issue squarely — who will come out on top?  Either the capitalists succeed in organising first — in which case they will drive out the  Communists and that will be the  end of it. Or the proletarian state power, with the  support of the peasantry, will prove capable of keeping a proper rein on those gentlemen, the capitalists, so as to direct capitalism along state channels and to create a capitalism that will be subordinate to the state and serve the state." (Lenin, Collected Works, Vol. 33, pp 66)
Similarly,  Deng Xiaoping in a talk during his visit to southern China says: "The crux of the matter is whether the road is capitalist or socialist. The chief criterion for making that judgement  should be whether it helps promote the growth of  the productive forces in a socialist society, helps increase the overall strength of the socialist state and helps raise living standards." (Social Sciences in China, Vol. XX, No. 2, pp. 29)
Further, in 1985, addressing some of the apprehensions of growing inequalities Deng Xiaoping says: "As to the requirement that there must be no polarisation (read growing economic inequalities), we have given much thought to this question in the course of formulating and implementing our policies.  If there is polarisation, the reform will have been a failure.  Is it possible that a new bourgeoisie will emerge?  A handful of bourgeois elements may appear, but they will not form a class.
"In short, our reform requires that we keep public ownership predominant and guard against polarisation.  In the last four years we have been proceeding  along these lines.  That is, we have been keeping to socialism."  (Selected Works of Deng Xiaoping,  Vol. 3, pp. 142-143)
Clearly, the CPC is in the midst of a serious  effort of building socialism with Chinese characteristics.  The CPC is endeavouring to rapidly expand the productive forces and, thus, consolidate and strengthen socialism in China through these reforms. On the other hand, as noted above, this very process engenders certain tendencies which seek to weaken or even destroy socialism. As a result, ideas and values alien to socialism will also surface.  Imperialist finance capital is there in China not to strengthen socialism but to earn profits and to create conditions of adversity to socialism.   They would certainly seek  the weakening of socialism or its dismantling in order to earn greater profits.  This is the current struggle between imperialism and socialism that is taking place in the theatre of China.