The (New) Projectment Economy as a Higher Stage of Development of the Chinese Market Socialist Economy

Abstract

The purpose of this article is to shed light on the reasons why Brazilian economist Ignacio Rangel's concept of “Projectment Economy” holds great possibilities for research into China’s economic development. The article reworks the concept, offering new means of determination and validation criteria to understand Chinese socialism. Issues addressed include surmounting “Keynesian uncertainty,” “creative destruction” planning, monetary sovereignty, and the “tacit adhesion pact.” These are taken up as categories offering empirical support for the New Projectment Economy concept. The article concludes that the New Projectment Economy is a higher stage of development of the mode of production dominant in the new socio-economic formation that has emerged in China as a result of the economic reforms begun in 1978.

Key Words:

• China
• economic development
• Ignacio Rangel
• Projectment Economy
• socialism

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 After maintaining for decades that the Chinese reforms were “pro-market,” Lardy (2018) realised that this trend was reversing. Naughton (2017), whose view of the reforms was similar to Lardy’s, perceived the Chinese state’s moving into revenue flow controls and raised the question of China possibly being socialist. Gabriele (2020), examining China since 1978, saw it transitioning from a centrally planned economy to a form of planning compatible with the market. Jabbour and Dantas (2017; 2018) developed the idea of a “strategic repositioning of the state” to indicate the state’s growing qualitative role since 1978.

2 Recent research has made interesting and telling points regarding the State’s increasing participation in, and control over, wealth and revenue flows in China. Piketty, Yang, and Zucman (2017), Naughton (2017), and Nogueira et al. (2019) reached similar conclusions showing that the Chinese state currently controls about 30% of domestically produced wealth. Contradictorily, the state – although smaller than in the 1970s – has much greater capacity for intervention.

3 Jabbour, Dantas, and Espíndola (2020) show the “New Projectment Economy” featuring new contributions at the technology frontier and with China as one of the participants.

4 Rangel saw parallels between the planning models of the USSR and the USA. He argued that both could be considered “closed models,” given the fact that they operated as continental economies. The USSR, Rangel (2005a, 260) classified “as a veritable development effort” directed to integrating thousands of workers occupied in agricultural activities into the “national economy” (the socialist equivalent of the “market economy”), while in the US economy, faced with problems of a different type, planning was tasked only with guaranteeing paid employment for the whole economically active population (see Rangel 2005a, 261).

5 Rangel (2005b, 367) stated utility in terms of Aristotelian concepts. He defined wealth as “the quality that certain things have of being useful to human society … Things’ utility is a relationship between them and society or people. This is useful when man can satisfy his needs through them.”

6 Marx, like Smith, classified all economic activities as productive or unproductive. Productive activities were those relating to the goods and equipment sectors that generated value, while unproductive activities had to do with maintaining the social order. To Rangel, the recent development of capitalism requires that these concepts be reviewed. Even so, in order to understand the socialism of our times, he extends the unproductive sector to that indicated by Marx in “Critique of the Gotha Programme” (1891) as part of what he called “consumption funds,” to which the growing surpluses of the productive sector of the economy should be destined. Today such consumption funds are expressed in the development of sectors such as education, health, culture, sport, recreation, and so on.

7 There is also a change in the composition of employment in China. As the industrial sector reaches a high degree of complexity, a service sector coupled with industry emerges. Most urban jobs generated are located in the service sector. This is a very different process from what happens in countries such as Brazil, where de-industrialisation leads to a drop in the average income of workers and opportunities restricted to the low-technology service sector.

8 Considered by its founders as part of the Post-Keynesian school, MMT incorporates other theoretical lines within the heterodox field, such as Institutionalists, Chartists, Functional Finances, and the Sectoral Balances. MMT stems from heterodox assumptions in order to: (i) describe the way capitalist economies work, with monetary and fiscal arrangements at its centre; and to (ii) prescribe public policies to avoid financial instability and ensure that full employment is achieved (see Vergnhanini and De Conti 2018).

9 In this respect, Rangel (2005c, 450) was correct in observing:

The nation is, without a doubt, a historical category, a structure that is born and dies, once its mission is fulfilled. I have no doubt that all the peoples of the Earth are advancing towards a single community, to “One World.” This will happen of its own accord to the extent that problems that are not solvable within national frameworks become predominant and the severe problems solvable within national frameworks are solved. But not before then. The “One World” cannot be a heterogeneous conglomerate of peoples, with some wealthy and others wretched, some cultured and others ignorant, some healthy and others sick, some strong and others weak.

10 The accelerated Chinese economic growth accompanied by the emergence of a large capitalist sector in the economy was accompanied by a large increase in social and territorial inequalities in the country. Something that must be intolerable in a society oriented towards socialism. However, as discussed, much progress has been made in terms of building a welfare state in China since the 2000s. In the late 2010s and early 2020s, a major regulatory wave has been underway, with the strategic objective of reversing this situation. This wave demonstrates the point that capitalists do not occupy positions of political power in China.