Many in the media of late have speculated regarding the fate of Alibaba, Tencent, Didi, and other large “private” businesses in China that Americans and others have invested in. The fate of Alibaba et al is just a continuation of the recent “closing” of China by the Communist Chinese Party under Xi Jinping after the “opening” begun with Deng Xiaoping in the late 1970’s. Although the analogy is not perfect, as no analogies are, a lot can be learned by seeking to understand the New Economic Policy initiated by Soviet leader Vladimir Lenin in 1921 and its subsequent end by Soviet leader Joseph Stalin in 1928. All signs point to a reemergence of strident Marxist ideologues within the Chinese Communist Party and the slow bleeding out of foreign business interests and investors in China, but more importantly a darkness descending upon the Chinese people.
The Soviet Union’s New Economic Policy of 1921 to 1928
In February of 1917, Tsar Nicholas II of the Russian Empire abdicated. Russia was at the time embroiled in the carnage that was World War I, with both the civilian population and the military exhausted by the privations they suffered. Soon thereafter a Provisional Government lead by moderate socialist Alexander Kerensky was formed with the intention of holding elections for a post-Tsarist government. This relatively weak government was overthrown in the so-called October Revolution of 1917 by the Marxist Bolsheviks lead by Vladimir Lenin who returned to Russia following the abdication of the Tsar. The Bolsheviks, or Reds, then engaged in a Civil War with the so-called Whites, which was a loose confederation of monarchists, ultranationalists, anti-Bolshevik socialists, and others opposed to the Bolshevik seizure of power. This Civil War ended with the victory of the Red Army and the formation of the Soviet Union in 1921.
During the Russian Civil War the Soviets instituted “War Communism.” War Communism was marked by the requisition of grain produced by peasant farmers, a ban on private businesses, nationalization of all industries, and tight controls over all economic activity by the central government. The period was notable for large scale human suffering and ultimately famine. Historians debate whether the Civil War created the exigent circumstances necessitating the drastic measures of War Communism or just an excuse for the Bolsheviks to implement their vision of Marxist economic reform.
At the end of the Russian Civil War, the Russian economy and society was shattered. After decades of internal strife caused by Tsarist misrule, the devastation of World War I, and then a bloody Civil War with War Communism, famine and like depravations swept the land.
In 1921 Lenin instituted the New Economic Policy, or NEP. NEP was the reintroduction of small-scale private enterprise back into Russia and ended the whole sale requisition of farmers’ produce, allowing peasants farmers some freedom to sell their produce after paying a tax in kind to the State. The NEP was essentially Lenin’s last-ditch effort to stave off the Soviet Union suffering the same sort of popular revolt that had toppled Tsarist Russia. The NEP marked a period of rapid economic growth and improvement in living standards for the Russian people, but Lenin’s successor, Joseph Stalin, nonetheless ended the New Economic Policy in 1928. Once again private enterprise became an evil incompatible with Marxist theory and Marist ideologues asserted tight control over the economy.
Communist China’s “Opening Up”
Following the collapse of the last of the Chinese dynasties in the early 1900’s, a time when much of China was subjugated by foreign powers, China entered a period of devastating Civil War. A weakened China was then invaded by Imperial Japan in the late 1930’s, resulting in further suffering for the Chinese people. Following the defeat of Japan at the end of World War II in 1945, the Civil War between Mao Zedong’s Communists and Chiang Kai-shek’s Nationalists resumed in ernest. In 1949 Moa’s forces prevailed with the Nationalists fleeing to what is now Taiwan and the Communists taking control over what is now “mainland” China.
China under Moa attempted to implement a Soviet style Marxist economic plan and predictably China’s economic decline continued. The “Great Leap Forward” in the late 1950’s and the “Cultural Revolution” of the mid to late 1960’s further decimated China. Only with the death of Mao Zedong in 1976 and the ascension of Deng Xiaoping and the introduction of “market socialism” did China begin to recover. Under Deng Xiaoping’s leadership through the leadership of his successors China underwent a period of tremendous economic growth in relative terms, and China’s prestige in the world rose as well. Still, despite years of tremendous growth, China’s per capita gross domestic product is still below the world average.
With the ascension of Xi Jinping as “paramount leader” in 2012 and his consolidation of power, most notably Xi’s abolition of a ten year limit on his time as president, China has begun to turn away from the opening up to free market ideals that powered its growth since the 1970’s and embraced a more authoritarian and top down economic model.
Stalin and Xi’s Closing
Vladimir Lenin and Deng Xiaoping never embraced free market principles as they relaxed centralized control of the economy. Each loosened control as a matter of necessity, to preserve the control of their respective countries for their respective Communist Parties. Joseph Stalin and Xi Jinping did not break with the ideologies of their respective parties by reasserting centralized control, both simply felt secure enough in their positions to return to their core beliefs and reassert centralized control.
Xi is first and foremost a true believer in Marxist doctrine. He does not look for inspiration from Adam Smith et al, but from Karl Marx. To understand the present and future of China under the Chinese Communist Party, study Joseph Stalin reign in the 1920’s to his death in 1953. There are obvious differences, but there are important parallels as well.
Like Stalin’s end of Lenin’s New Economic Policy marked the return to dark days for the peoples of the Soviet Union, Xi Jinping’s tightening of control over all aspects of the lives of the Chinese people portends a return to very dark days ahead for those under his thumb. The Soviet Union, although a much larger military threat than China is or is likely to become anytime soon, was of relatively insignificant importance to the world economy in the 1920’s and 1930’s. The same cannot be said for China under the Chinese Communist Party today.