The Rise of China and the Demise of the Capitalist World-Economy

by Minqi Li

This book analyses China's increasing economic power and the impact it is having on our global capitalist system.

Minqi Li outlines the possible trajectories for China in the twenty-first century, and what these will mean for the rest of the world. Combining perspectives from Marxism and world-system theories, as well as examining ecological limits to growth, Li argues that China is likely to exacerbate the major contradictions of world capitalism, which could lead to the demise of the existing world-system.

This is an essential text for students of political economy, economics and global politics.

Genres: China, Economics, Politics, History, Nonfiction, Theory

227 pages, Paperback

First published October 20, 2008

About the author

Minqi Li (born 1969) is a Chinese political economist, world-systems analyst, and historical social scientist, currently professor of Economics at the University of Utah. Li is known as an advocate of the Chinese New Left and as a Marxian economist.

Reviews

[David]

Wonderful lucid, clear, theoretically creative but solid treatise on the history and future of the world-system sustaining contemporary capitalism. Broadly speaking, it approaches this subject from three angles:
1) a more-or-less classically marxist base explaining bourgeoisie, proletariat, semi-proletariat and peasantry, along with mental and physical labour.
2) a Wallersteinian world-systems theory explaining the distribution of classes, wealth and capital flows across the globe on the basis of core, peripheral and semi-peripheral nations.
3) a statistical data-based analysis of resource abundance and resource consumption rates charted alongside technological development (and its costs) and the ecological conditions necessary to either sustain current growth-reliant capitalist models or sustain human civilization at all.

The picture it paints isn't pretty, but it isn't hopeless either. Rather than parotting liberal claptrap about how global warming, biodiversity collapse and soil erosion is actually a problem we should tackle with local solutions or appeals to our capitalist overlords, Li accepts that we will inevitably sail past afew ecological tipping points and suffer massive consequences, which will probably necessitate future governments to reduce the global population to approximately 2 to 3 billion humans. The challenges of resource allocation and full international co-operation can only be addressed by a world-socialist government (or governments).

Li does not subscribe to a teleological determinist view of the matters: he fully concedes that instead of this socialist system, we might end up with either a "neo-feudal" system redolent of the DPRK (a curious comparison, especially for a self-professed maoist. Why did he find more freedom to publish his papers in the US rather than in China anyway?) or simply with no civilization at all. What he ís sure about, however, is that the capitalist world-system will fall between 2025 and 2050. This prophecy he bases on three pillars: the exhaustion of energy and resources (in the sense that we consume resources both 'positively' and by dealing with ever-growing ecological catastrophes), the ascendance of China (and to a smaller extent India) to semi-peripheral status (upsetting the balance of forces and overtaxing the total surplus value that can be generated to pacify core workers) and the rising political consciousness of the worldwide (semi-)proletariat. He makes this case relying on loads of data, accessibly presented in graphs and tables, in so doing avoiding the idealistic generalizations world-system theorists get accused of. What the book emphatically does not do is provide us with a roadmap for future action: Li strictly limits himself to diagnosing and predicting.

As an added bonus, the second chapter spends a good while picking the bones of the Mao-era China reviled both internationally and within post-Mao China. Li, himself a son of a rural physician and a product of the rural education policies instituted by Mao (and subsequently scrapped under Deng), comes to the fact-based conclusion that only an analysis blinded by ideology and misconceptions could miss the fact that under Mao average life expectancy shot up by 30 years, popular democracy ruled and social security (based on the "iron rice bowl"-policies) far outstripped what is offered to the average Chinese citizen these days. Handy statistics and interpretations to counter bourgeois propaganda with.

The only downside to the book is that it came out right before the economic crisis of 2008, which renders the analysis dated in ways I as a layperson cannot amend. Similarly, Li did not foresee the rise of shale gas ('fracking') and thus did not factor this in when calculating the peak production of fossil fuels. These date-related issues notwithstanding, The Rise of China and the Demise of the Capitalist World-Economy is a broadly accessible no-nonsense treatise on the most important issues of the near future and should find its niche in any sort of socialist's bookshelf.

[Jeff · Rating 5 out of 5]

This is one of the best books that I've read lately. Firstly, the organization and writing style of the book is superb. The book is articulate, coherent, and well-paced. The first few chapters read a bit slow, but in the context of the whole book are necessary to understand the implications of the authors suggestions in the final two chapters.

The author combines his authority on radical Marxist/Maoist thought with the world-systems analysis of Immanuel Wallerstein. This results in an overall critique that covers many topics, but has a coherent framework that is well referenced. The author emphasizes the necessary of inter-state competition in order for capitalism to flourish (to drive down labor costs, open markets, etc.). The author describes the role of successive global hegemonic powers (dutch financially, british, US) since the 1600s to reduce labor, taxation, and environmental costs for capital accumulation and quell inter-state instabilities. The rise of China is highlighted in this analysis as the next global hegemonic power, but doubts are raised as to whether the planet can actually sustain this transition since current levels of production are currently unsustainable.

An entire chapter is devoted to the history of China, including the exploitation of China by Western Europe and the US, the rise of socialism, and the transition to a market capitalist economy. It shows the contrast between socialism and capitalism in practice, highlighting positive and negative outcomes of each system. Though I feel like this was the most disorganized chapter in the book, it was still a pleasure to read, and provided much insight upon further reflection.

The chapter titled "The End of Endless Accumulation" covers the current global economic and ecological state as well as the future course of these systems under global capitalism. The evidence is clear that current levels of consumption and accumulation are not sustainable and will eventually lead to worldwide collapse. This chapter is the strongest indictment of the capitalist system that I have read to date.

The book closes with the final chapter describing what humanity is in for in the coming 50 years. It does not pull any punches, and takes a reasonably pessimistic tone. It reiterates common themes of global socialism (either independent socialist states working in concert or one global governing body) as a potential organization in transition to a more sustainable economic and ecological existence while maintaining (expanding?) individual and collective freedoms.

[Brandon Wu · Rating 3 out of 5]

If you can get past the utopian socialist predictions and Mao apologism, Minqi Li has put together a highly thought-provoking argument in the world-systems tradition about the decline of American hegemony and whether or not China is set to become the next global hegemonic power. His answer is no - for various interesting reasons, including inherent contradictions in China's economic rise (which are very similar to the contradictions in Western capitalism, many of which have been written about since Marx), ecological limitations, and the question of whether what remains of the periphery can support a new core that includes the massive populations of China and India.

Li seems to think the result will be a brand new kind of world-system, something qualitatively different from the current capitalist world-economy. His solution is a socialist world government. If that's a bit hard to take seriously, it doesn't take away from some of the very important questions that Li asks in this brief, highly readable monograph.

[Noah Enelow · Rating 3 out of 5]

This book is completely worth reading, despite its tendentiousness, millenarian predictions, and Mao apologism. Actually, the latter is worth listening to, since all we get in the West is demonization of Mao. This is not to say that the demonization is entirely unfounded, but an articulate pro-Mao Chinese perspective is worth reading. Such a perspective belongs to Minqi Li; as far as such perspectives in the West, he may be the best - or the only one - we've got.

Minqi Li is a true believer in the "end of capitalism" and it shows.

[Pete Dolack · Rating 5 out of 5]

The world is not limitless, yet growth without limits is touted as a permanent economic elixir. But natural resources aren’t infinite, nor can demand be infinite. What happens when the limits of growth are reached? We aren’t supposed to ask that question about capitalism; the assumption is that economic activity will always grow. The insertion of China into the world capitalist system has created the opportunity for more growth as a country of 1.3 billion people has been thrown open to the world’s markets.

But what if, rather than throwing capitalism a lifeline in the form of a vast pool of consumers who will drive demand, China instead will fatally destabilize an already weakened world economic system?

China will be the final straw that will bring about the downfall of the capitalist system is the provocative conclusion of economist Minqi Li. The book’s central thesis is that the huge mass of low-wage Chinese workers will drag down wage levels globally; the increase of industrialization in developing countries will lead to exhaustion of energy sources; and that ecological limits will force a halt to growth, fatal to a system dependent on growth.

Professor Li believes that the combination of these crises will bring an end to the capitalist system by the middle of this century. The Rise of China, however, is not apocalyptic; rather it methodically builds it case piece by piece through a sober examination of economic trends, calculations of the limits to a range of natural resources, analysis of long-term environmental unsustainability, and study of historical trends going back centuries. Nor is this a bleak work; Professor Li writes in the Gramscian spirit: pessimism of the intellect, optimism of the will. What will follow the collapse of capitalism is not pre-ordained but is up to humanity to determine.

The first two of the book’s seven chapters provide an interesting discussion of Chinese history, before and after the 1949 revolution. Pro-capitalist factions within the Chinese Communist Party gained the upper hand soon after Mao Zedong’s death in 1976, with Deng Xiaoping wresting party leadership by the end of the decade. Early reforms granting concessions to workers and peasants cemented political control for the Deng faction, Professor Li writes, enabling the party to then introduce capitalism. A 1988 law granted enterprise managers full control in the workplace (including hiring and firing at will), and the development of market relations enabled privileged bureaucrats to enrich themselves.

Intellectuals on the one hand, and enterprise and bureaucratic elites on the other, sought the growth of market relations and a firm turn toward capitalism. The two groups, however, disagreed on how the spoils would be divided between them, and the party was split three ways on how fast and how far to move toward putting the economy on full market relations. It was Deng who proved to be “the master of Chinese politics,” Professor Li writes, as he was able to implement an intermediate strategy between the party’s poles and use the crackdown in Tianamen Square to reduce the intellectuals to the junior partners of the ruling elites and to break the resistance of urban working people. “Socialist rights” that were revoked included job security, medical insurance, access to housing and guaranteed pensions. The creation of an exodus from the countryside provided a huge pool of surplus labor to keep wages extremely low.

Professor Li’s analysis rests on “world systems” theory, which divides the world’s capitalist countries into three general groupings. World systems theory emphasizes that capitalism is a global system that changes and mutates over time and therefore must be analyzed as a single unit rather than as a collection of nation-states. The massive size of China is the destabilizing agent, Professor Li argues. He presents four possible scenarios that could arise from the rise of China.

In the first scenario, “China may fail. China’s great drive toward ‘development’ in the end may turn out to be no more than a great bubble.” The possible second scenario, the “downward-conversion scenario,” China, “with its enormous labor force, will completely undermine the relative monopoly of the historical well-to-do semi-peripheral states in certain commodity chains.” forcing lower wage rates in those countries.

His third scenario is upward convergence, under which China “succeed[s] in its pursuit of ‘modernization’ and become[s] a secured, well-to-do semi-peripheral state,” and Chinese wage rates rise to meet the better-off semi-peripheral states. But under this scenario, what is available for the rest of the world would be reduced, which would spark widespread unrest. Finally, under the fourth possible scenario, “China’s upward mobility takes place at the expense of the historical well-to-do semi-periphery? In other words, imagine the scenario (the fourth scenario) in which the rise of China (and India) successfully displaces the historical well-to-do semi-periphery, what are the likely implications for the existing world system? … [A]fter all of the investment is distributed, how much will be left for the other half of the globe?”

Given that the book was published in 2008 — just before the global economic collapse — some of the predictions are becoming out of date. The first scenario, of China falling back into poverty and its attempted rise being aborted, clearly won’t happen — that ship has sailed, so to speak. But the limits of the Earth’s resources and environment as industrialization and consumerism continue to grow continue to be there for anybody who cares to pay attention.

Investment is a necessity, and to compete successfully, what is wrung out of labor must rise. Machinery is the route toward greater efficiency. But as machinery and consumer products become more sophisticated, energy and other resources are consumed at greater rates; thus energy inputs rise faster than the population, pushing energy usage beyond sustainability and degrading the environment.

Crises in economics, the environment, shrinking natural resources and the chaos of global warming are leading to a threat to very survival of humanity, Professor Li argues. Moreover, multiple crises are leading to a point where economic growth is no longer possible, the ultimate contradiction for the capitalist system, the very existence of which is based on endless growth and accumulation.

What comes next is up to humanity to decide. Professor Li quotes world-systems theorist Immanuel Wallerstein as predicting the world will enter a post-capitalist era in the second half of the 21st century. But what will that system or systems be? It could well be much worse — an authoritarian feudalism in which survival is a struggle in a time of scarcity is certainly foreseeable. Or it could be a democratic socialist system, in which production is for human necessity rather than an elite’s wealth accumulation and in which the consequences of a changing climate and the limitations on the world’s resources are handled in fully democratic, rational manners without elites to confiscate most of what is produced.

It is not necessary to agree with everything in the book to find it a valuable contribution toward understanding the stresses of the present economic crisis and a stimulant to discussion of the viability of continuing on the current economic path. One conclusion that shouldn’t be controversial, however, is that there will be no saviors. We’ll have to save ourselves.

[Evelyn R · Rating 5 out of 5]

Excellent overview of China's growth and its likely destabilizing effects on global capitalism. Found it too short for is own good, but appreciated that it was relatively accessible even to those who haven't read Arrighi and Wallerstein.

[Kuu]

again, i need alix to vibe check this, but my main thought when reading any chapter past the first was "okay so when will we talk about china?"

[Jesse · Rating 4 out of 5]

A very thought provoking book, rich with financial history of not only China but western capitalism as well. The author illustrates (maybe unintentionally) the very real fear of China, a communist country, having a successful capitalist system and surpassing the U.S. and the Western countries in general as a financial superpower as a good possibility.

[Felix · Rating 4 out of 5]

As a concrete application of Wallerstein's world-systems analysis, this book is excellent, as is the challenge it lays to the idea that China (or indeed India) could be poised to wrest the position of chief global hegemon from the ailing US empire. It is, however, by its nature, now terribly outdated, the GFC of 2008 being only the first subsequent development which problematises the picture painted by Li. The book also suffers here and there from a paradigmatically Marxian overcaution of vision, often choosing to restate established facts instead of exploring alternative scenarios, to the extent that the final chapter barely discusses the "rise of China" beyond reiterating the (admittedly convincing) argument that accelerating development in the now-immense semi-periphery will put unprecedented pressures on the world-system, on a scale at which capitalism can no longer secure the means for its self-preservation. The "prescriptions" offered also amount to very little - vague gestures towards a "socialist world government" made up of existing socialist states (although throughout the book only Cuba is recognised as resembling such a state at time of writing) and an "orderly, long-term" decline of world population to ecologically-sustainable levels are intriguing, but are left frustratingly undeveloped. Li's subsequent published books (2014 & 2015) will hopefully update and expand the overall picture and engage with some of the subsequent shifts in China's domestic and inter-state policy.

Also of note is Li's account in the preface, titled "My 1989", of the events of that year in and around Beijing. Li presents a decidedly Maoist narrative of the Tian'anmen Square protests which very nearly matches that of the CPC account - that some thousands of striking workers, as well as a handful of PLA soldiers, were slaughtered in the clashes that occurred around Tian'anmen and throughout Beijing, but that the students protesting in the Square itself were allowed to leave unharmed. The Maoist angle surfaces in Li's suspicion that the differing treatment afforded to the protesting students and to the workers striking to support them was in fact key to the Party's wider strategy - that the students being unharmed while the workers faced brutal suppression was a deliberate manoeuvre designed to break the solidarity between the two groups, crushing the spirit of organised rebellion left over from the Mao era, and ultimately leaving the way clear for the smashing of the Iron Rice Bowl in the early 90s, inaugurating a new era of the proletarianisation crucial to capitalist accumulation on a massive scale. This idiosyncratic account of June 6th cements Li's status as something of a Maoist true-believer, and adds weight to his subsequent portrayal of the reform-era CPC as a new ruling class happy to dismantle China's socialist legacy and integrate its working classes into the capitalist world-system. It has also occurred to me that framing the events of 1989 in this way may have been a bid by Li to sneak his book past CPC censors, seeming to agree with the "official" account while subtly offering a significant contribution to revolutionary Maoism such as it exists in the 21st century.

[Rohan Katpally · Rating 4 out of 5]

I do wish this were a longer book because I enjoyed the author's writing style so much. Nevertheless, it got its points across very well.

Broadly speaking, the book looks at how the rise of the Chinese proletariat will affect the capitalist world-economy through three lenses: a classical Marxist, a world-systems theory, and a data-driven one.

There's a few predictions in here that haven't borne out, but we can't all be perfect writing from 2008. I do like the neat connection it makes between capitalism and ecological destruction and what will be necessary to do under socialism, probably because it aligns with my opinions.

There's also some good history of modern China in 1949. You could call it Mao apologism, but I think it's more intellectually honest than the demonization of Mao in the Western world.

The last chapter is essentially a recap of the whole book in case you don't have much time but want to understand the arguments set forth. The book essentially leaves off with the motto "socialism or barbarism".

My only problem with the book is that by sticking with the Marxist description of history, with its modes of production, it may lose out on some other lines of flight from the current situation. But it presents some useful and extraordinarily likely options for the future, so that's probably enough.

[Quinn · Rating 4 out of 5]

It is a really good synthesis of world systems theory (as I know it), Chinese-influenced Marxism / Maoism, and climate science. I think Li makes an extremely compelling argument that capitalism is reaching / has reached the material limits of its ability to continue as a world system (thank fucking god) and that change is coming whether we like it or not. Marxists have been saying this for centuries, but I think Li's analysis of the material limits of the planet & impending ecological crisis compared to the economic necessities of capitalism show that there really is nowhere left for capital to expand and exploit. Li also makes a very compelling argument that, since the US empire is in decline and China is positioned (but ultimately cannot because of its own position and internal contradictions) to become the next hegemon, a lot of the hope for global systemic revolution and a just transition lies in the Chinese working class retaking power. This is why it is critical, I think, to develop the knowledge and skills to struggle in solidarity with the Chinese working class.

[Gregory A. · Rating 2 out of 5]

Minqi Li's book has very strong pluses, but even stronger minuses

His work was an excellent short economic history of China fron the 1600s to the early 2000s. He also provides us with a short history of the democracy movement of the 1980s, of which he was a participant. So The Rise of China... is definitely worth reading for that

However, the apologism for the Great Leap Forward and the handwaving away of the deaths of 30 million people -- mostly poor farmers -- is grotesque.

Also, Minqi's Malthusianism is not at all helpful. A "socialism" based on a massive reduction of the standard of living of workers and farmers, and the reduction of the human population by 3 billion is not the kind of socialism that offers a way forward for the working class, farmers and poor people of the world.

Why would working class people carry out a revolution to achieve such a massive defeat?

It's to Minqi's credit that he does not predict a working class revolution to achieve this austerity "socialism"

Those strong downsides really take away from this book's value

[Roxy The Bolshevik Girl · Rating 5 out of 5]

Impeccable.

[Pierre · Rating 3 out of 5]

A rarity - a modern Maoist economic history of China. It's refreshing read, and contains perspectives and focuses you simply don't get in your standard narrative of reform and opening up. But a lot of the defence of Maoism sections are, in contrast, tired and repetitive excuses. And at the end of the day, it's just not a convincing approach. I think a far left history of Chinese reform could do a bit better

[Wangdu · Rating 5 out of 5]

One of touchstone books.

[Saidi · Rating 5 out of 5]

This was a great book gives clear understanding of the great empire

[Shaheed Bhagat Singh · Rating 3 out of 5]

meh