China needs to work towards a new socialism

30 years ago, Eastern European communist regimes fell like dominoes while neoliberalists declared "the end of history" and the Chinese Communist Party (CCP) was isolated after the Tiananmen crackdown. In this milieu, Deng Xiaoping made an outlandish remark during his Southern Tour of China in 1992 that he was "firmly convinced that more and more people will come to believe in Marxism... So don't panic, don't think that Marxism has disappeared, that it's not useful any more and that it has been defeated. Nothing of the sort!"

True enough, 30 years later, an unprecedented crisis has confronted neoliberalism and China has emerged strongly. The CCP has attributed China's success to the fact that "Marxism works". This loyalty to Marxism has led many countries to view today's China with the same lens that they did the Soviet Union. Panic-stricken by the rise of China, they are doing their utmost to stifle and suppress China. The resultant deterioration of the external environment has brought uncertainties to China's future development.

"Socialism with Chinese characteristics" in the market economy is in need of a new image to set it apart from the old socialism. It should be humane, palatable to the outside world and different from foreign impressions of an old socialism that is overbearing, repressive and bloody. However, this new image is premised on an in-depth understanding of socialism in the new era.

Today's China is a far cry from the Soviet Union, or even the China of 30 years ago. The most important difference is that the planned economy no longer exists and the party-state's control over the economy, society and individuals has relaxed considerably. Gone is the omnipresent and totalitarian rule that people in the free world fear.

Second, the market economy has not only created great wealth and greatly improved standards of living but also popularised (albeit as yet not consolidated) in China many rights and freedoms enjoyed by people in the free world. Many Westerners have started and conducted businesses, worked and lived in China for a long time, with little indisposition. They even feel that life in China is more dynamic and exciting, and that opportunities are more abundant.

Third, connectivity and integration with the global capitalist economy have created many opportunities for China and disrupted Chinese economy and society, including bringing about changes in people's characteristics, values and behaviours. With Chinese people and Chinese products going global, China's close ties with the world is unprecedented. Consequently, efforts by the West to decouple from China are unlikely to succeed.

Indeed, more people are in favour of socialism. Even in the US, the bastion of capitalism, some people have openly campaigned under the socialist banner for the US presidency. As socialism has become part of mainstream politics, it is no longer a dirty word among the younger generation. However, this does not mean that more people believe in Marxism because socialism is much broader than Marxism. It is the evolutionary dynamics of capitalism that has prompted the global resurgence of socialism. Instead of being the pioneer of the trend, the CCP is merely a beneficiary of this groundswell.

Several forces are pushing for socialism worldwide. First and foremost, this global trend of socialism is the result of the polarisation of the rich and the poor which has caused the bankruptcy of neoliberalism and created widespread turmoil in the West. Trump's victory in the US presidential election and the upsurge of populism in various countries heralds a new kind of politics so significant that it threatens to bring down the very foundations of capitalism.

Second, improvements in quality of life are increasingly independent of economic growth. This statement has two components. The first is that the benefits of economic growth in the past decades have been overwhelmingly accrued to a handful of extremely rich people and economic growth is becoming meaningless for ordinary people. Technological progress has made jobless growth, wage stagnation and welfare cuts increasingly commonplace. Having initially surfaced in developed countries, this phenomenon is proliferating in developing countries.

The second component is that after becoming a middle-income society, an increase in material wealth encounters diminishing returns to the improvement in quality of life. It may even adversely impact the quality of life as ordinary people find themselves having to work harder for additional income.

A global study by the UN has shown that income growth is only initially significant in increasing happiness, and that happiness (and misery) is more dependent on non-material factors once income reaches a certain level. These factors include family and interpersonal relationships, government services, work and income security, law and order in society, fairness and justice, and physical and mental health.

For example, the World Happiness Report 2017 by the UN found that "the effect from the increase in the numbers of people having someone to count on in times of trouble is by itself equal to the happiness effects from the 16-fold increase in average per capita annual incomes required to shift the three poorest countries up to the world average (from about $600 to about $10,000)".

China's level of subjective well-being (SWB), taking into account economic and non-economic factors, has been declining since its peak in the 1990s, although its per capita income has increased by more than ten times. Unbridled growth and expansion, upon which the capitalist mode of production depends, are increasingly meaningless to most people.

Since making improvements to the quality of life depends on improvements to social conditions, and as resource and environmental limitations are forcing the shift from the accumulation of material wealth to the pursuit of spiritual wealth, socialism has found a greater role to play.

The third force calling for socialism is that, in addition to nuclear weapons, market-driven technological developments in domains such as bioengineering, artificial intelligence (AI) and space exploration may become existential threats to humanity if poorly controlled.

As capitalism is profit-focused, it is extremely dangerous to entrust the fate of humanity to market forces. Technological developments must be controlled by humanity's collective values and moral standards. They should be guided by social well-being instead of profit maximisation. In other words, socialism is a better bet.

Finally, there are specific reasons for socialism in China. Due to its huge population base, China's per capita income will be lower than that of developed capitalist countries for a long time to come, and perhaps may never be able to catch up. However, there is no need to if China practices socialism. China can only gain some advantage vis-a-vis capitalist countries in improving the non-material factors that contribute to the subjective well-being of its people.

Endless economic expansion by pursuing the value orientation of capital will not only fail to improve the quality of life of a country but will instead lapse into a vicious circle of the race to the bottom or "involution" from over-competition. The outcome will be social unrest due to unequal and unjust wealth distribution. Contrary to the "pauper's transition" in the Mao era, pursuing socialism now has a higher starting point in material wealth, a fresher paradigm and hence a greater probability of success.

First, the new socialism liberates the forces of production by unleashing "excess" and deliberately destroying productive capacity in capitalism by changing the purpose of production from meeting market demands to addressing social needs. "Socialism with Chinese characteristics" is still unable to achieve this today.

Second, the new socialism gradually elevates the production of positive externalities to the primary mode of production. Capitalist production is characterised by exclusiveness, which is to gain monopolistic profit by leveraging private property rights. Socialist production, however, is characterised by inclusiveness, which is the pursuit of "common prosperity" in production guided by use value.

In the era of the digital economy, market rules have drastically changed due to the considerable and increasing spillover effects of new technologies that reverse the diminishing marginal benefits of the traditional economy. With marginal costs approaching zero becoming the norm in many industries, the propensity of new technologies as public goods is evident. Socialism is superior to capitalism in giving full play to the advantages of the new technology revolution.

Third, the definition of employment can be considerably expanded once the restrictions posed by private rights are overcome through institutional innovations. A clear upcoming trend is that fewer jobs are going to be needed to produce sufficient goods and services for the world. The common-sense rule of capitalism is that one who does not work starves; this might increasingly be the fate of mankind because conventional jobs are fast disappearing.

On the other hand, work in many areas is left undone that will improve the quality of life in society, because what is produced are public goods incapable of generating a market price and becoming profitable. There is a limit to what the government and the third sector can do due to budget or funding constraints. One of the roles of the new socialism is to create non-traditional employment where capitalism has failed.

Fourth, the new socialism remodels value assessment in society. It breaks the monopoly of market assessment of value by introducing social, scientific, moral and aesthetic assessments, and prevents the tendency of corruption in the government's assessment of values.

Fifth, although the old socialism has failed because of its rigid planning system, planning remains a feature of socialism. The new socialism arises in the digital economy, in which instantaneous information and big data render central planning unnecessary. With AI, the internet and a certain degree of integrated coordination by the government and community and other organisations, it is entirely possible for market entities to plan independently. Free and autonomous initiative can be sustained, and the clumsiness and arrogance of power in state planning can be avoided.

Sixth, in addition to targeting subjective well-being, the new socialism seeks to fully develop and unleash everyone's potential. In the old socialism, every person is a cog in the big wheel, and "does whatever the party orders them to do", regardless of the individual's strengths and preferences. In a capitalist society, the bulk of people's time and energy is consumed by the struggle for survival. Unable to do what they want and what they do best, the people are shackled by various "mountains" of burdens, such as housing, education, ageing and medical care, and are overwhelmed by the demands of the 996 work culture (9am to 9pm, 6 days a week).

In short, new socialism is socialism in the broad sense. On the rise in today's world, the new socialism has broad social foundations and large numbers of supporters and sympathisers. "Socialism with Chinese characteristics" is currently far from meeting the requirements in the above six areas. Lagging behind in ideology, the CCP dawdles between capitalism and the old socialism, habitually regressing to the latter.

In practice, socialism in underdeveloped countries takes on a duality, that is, statism in the name of socialism. This is unsurprising because a country's top priorities are to strengthen itself, oppose foreign aggression and safeguard its independence. While building a strong country is the prerequisite for improving the people's livelihoods, it can easily become an end in itself under the banners such as "national rejuvenation". Socialism has a tendency to morph into statism.

The new socialism is people-centred, which is the current slogan of the CCP. China's socioeconomic structure has changed dramatically in the past 40 years but the core political structure has basically remained unaltered, except for implementing different principles and policies. Reliable institutional safeguards that ensure that socialism in China is "people-centred" or "puts people first" are still lacking.

Establishing these safeguards will inevitably involve a reform of the political system so that the country's top-down exercise of power can be complemented by bottom-up mechanisms for accountability. The lack of a clear understanding of the essence of socialism is likely to lead to the resurrection of the old socialism, whereas an upsurge of nationalist sentiments will result in the people merrily going along with statism.

Related: Can socialist China change society's value orientation and triumph over the ills of capitalism? | Is Chinese socialism superior? | The Chinese ruling party needs a new pact with the people to forge a more humane and self-confident nation | Can China succeed in income distribution reform and get rid of its celebrity economy? | A new paradigm needed: China cannot achieve 'common prosperity' with Marxism and class struggle | Rise of China's CCP and demise of USSR's CPSU: A tale of two communist parties