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Михаил Озеровский

Social capitalism as the only true socio-economic system

The original article is written in Russian. This is a translation of the article.

Economic socialism.

The USSR. The 1930s and the rise of the planned economy under Stalin. All Stalinists unanimously repeat that Stalin is an economic genius. This is true. Stalin was the ruler who kept the socialist economy afloat by making it rigidly centralized. According to Soviet statistics, by 1937 the industrialization and collectivization of agriculture, social and cultural revolutions had taken place in the USSR. The rate of development of the country doubled and exceeded more than 25% in industry, more than 6,000 new plants and factories were built. The USSR came in first place in Europe in terms of gross industrial output and second in the world after the United States. Believe such statistics or not, you decide.

The socialist economy cannot live without rigid discipline. This has shown time. The miracle that Stalin created could not last long. Forces are depleted, and not every ruler could control the economy of the whole country. And any failure in the management of the state of the socialist economy leads to its collapse.

The second problem of the planned economic system is that, unlike capitalism, where demand immediately gives rise to supply, socialism cannot quickly respond to the needs of society.

The People’s Republic of China, its methods of transition from economic socialism to state capitalism with a socialist superstructure – social capitalism.

Let’s take China now. When China was a socialist state, the GDP created by state-owned enterprises has steadily declined, from 55% in 1998 to 41% in 2008 and 30% in 2011. China understood that the socialist economy is not efficient and that it is necessary to move on to capitalism.

I think there was no doubt in choosing between 2 types of capitalism – only state capitalism was suitable for China.

By the way, the leader of the proletariat, V. I. Lenin, believed that state capitalism would help the young Soviet Republic to move to socialism. In China, the opposite happened. In transitioning to state capitalism, the Communist Party of China abandoned the socialist superstructure, promising the people that the life of the proletariat would not change in the transition to capitalism. The current economy consists of capitalist monopolies, which are not only regulated by the state, but also carry out the conceived ideas of China’s five-year economic plan. Thanks to capitalism, China receives investments from all over the world, and mainly from ethnic Chinese abroad. That is why China’s infrastructure is developing at a tremendous pace. For example, as of the end of 2017, China had 4. 77 million km of roads, including 136. 5 thousand km of highways, according to the latter indicator, the country was in first place in the world.

State and liberal capitalism.

What is the difference between liberal and state capitalism? When capitalism is not regulated by the state, this can lead to an oversupply and lost demand. We observed unregulated capitalism in the USA in the 1920s. The oversupply caused the crisis we know as the Great Depression. The oversupply, of course, was the result of overcompetition and the eternal struggle for the market. It was then that the idea of the economist John Keynes arose that the state should actively help the economy – give people money, reduce taxes, finance large projects that provide employment. That was, in my opinion, the first idea of state capitalism in the United States. Under liberal capitalism, the working class is the most exploited, and power usually passes to the oligarchs. With such an economic system, we have low wages and pensions. Social benefits are also unworthy.