From the American System to the Chinese Dream: A materialist Understanding of the American Revolution's Place in Global History. By: Marius Trotter

This is part 2 in a series of articles on the American Revolution. Here is Part 1. 

Before we go into the reasons the liberal/left intelligentsia has decided to disown the American Revolution (the subject of part 3), it is important to take a step back and re-examine the event with new eyes.

The American Revolution as a Developmental Project

The American Revolution was not merely a war of independence. It was also an economic revolution- the creation of the first major power that broke free of the laissez-faire free market empire of the British elites who held the world in thrall for the better part of two or three centuries.

The problem with the popular conception of the American Revolution is viewing the war of Independence as a singular event, confined to the iconic year 1776. But if one were to take a more holistic interpretation, the American Revolution was a more prolonged process. It spanned generations and its key tasks were not fully resolved until the cataclysm of the American Civil War/Reconstruction period of 1861-77. Instead of the War of Independence and the Civil War being two separate events, they were bookends of the same revolutionary transformation.

The Founding Fathers were concerned with how independence, tenuously won, could be maintained. Starting with Alexander Hamilton, the (later) Thomas Jefferson, Congressional leader Henry Clay and finally culminating with Abraham Lincoln, these far-sighted leaders represented the most politically advanced sections of the ascendant bourgeoisie. They enacted protectionist, non-free market policies which made the United States into the first successful large scale developmentalist state. In the decades and centuries to come, aspects of this state would be imitated, built and improved upon in many national liberation movements, including socialist and nationalist governments across the Americas, Europe, Africa and Asia.

Like all their colonies, Britain had designed the 13 colonies to be little more than a trading hub for its merchants and an extraction point for raw materials. Royal law had in fact forbidden independent colonial manufacturing. William Pitt the Elder, the British Prime Minister and otherwise known to be a sympathizer of the American colonial’s cause, famously said “if the Americans should manufacture a lock of wool or a horseshoe, I shall fill their ports with ships and their towns with troops.”[1]

Coming from a place of colonial underdevelopment, the American Revolution was a premature bourgeois revolution. Once the Americans had managed to oust the British, the mercantile capitalists and bankers of the Northeast and Mid-Atlantic states found themselves unable to hold onto state power. The newly freed colonies had only embryonic industry and the urban working class barely existed. The overwhelming majority of the new country’s working population were small yeoman farmers, artisans, indentured servants, and in the South chattel slaves. Thus, the economic base of their class was extremely weak in the 18th century.

The new American republic was in a perilous position. The Southern planter aristocracy was wealthy yet parochial and stagnant in its overall worldview. They had no interest in supporting industrialization in America, being content with importing manufactured goods from Europe. This is especially true between the War of 1812 (when the cotton boom began and saturated the Atlantic markets with the commodity) and the Civil War, where the South can essentially be seen as a sort of neo colony of Britain, only semi-independent and a source of raw materials for foreign powers, who subsidized an indolent comprador aristocracy. In league with them were the financial capitalists headquartered in New York City, who cared little for the industrial development of the nation overall as long as they could speculate on the cotton trade.

The slavocracy and their allies had little interest in putting the government behind infrastructure construction, since they ruled their home states like jealous feudal fiefdoms and viewed a too powerful federal government as a potentially hostile power center. Modern roads and canals would make direct trade with Northern states easier, but it would also make it easier for slaves to escape, for impoverished Southern whites to migrate North in search of better wages and for federal troops to march in. An agrarian, un-urbanized, un-industrialized America dependent on manufactured imports from its sworn enemy Great Britain would have inevitably been brought back under the Crown’s sway financially, if not outright militarily.

  It was Alexander Hamilton, the first Secretary of the Treasury and aptly named ‘Father of American Capitalism’, who devised a strategy for how the Northern capitalists could build up their economic strength while also saving the new Republic from falling back into the clutches of foreign powers.

Advocating the ‘American School’ of economics, Hamilton pushed several key tenets which were seriously at odds with Adam Smith’s free market orthodoxy. First was the creation of a National bank that would extend credit to development projects deemed to be of long term national interest and not merely short term profit. Second was heavy tariffs against manufactured goods from Britain that would provide a protective wall behind which American manufacturers could grow. Third was using money from these taxes and other sources for ‘internal improvements’ (roads, canals) which would stimulate interstate and internal commerce, designed to pull the republic away from the British dominated maritime economy.[2]

As the First US Secretary of the Treasury, Hamilton succeeded in founding the First Bank of the United States in 1791, and he succeeded in getting the Tariff of 1789 enacted. This tariff, the second piece of legislation ever passed by Congress, was signed into law by President George Washington on July 4, 1789. It was originally conceived as a way to pay off debts accrued by the states during the War of Independence. While not officially protective, in actual practice it was. Imported china and glassware were taxed at 15 percent, cotton and woolen clothing taxed at 7.5 percent, as well as all metal manufactures.[3]

Jefferson’s Democratic Republicans, at odds with the Federalists, decried these measures as against the principles of liberal free trade. Thomas Jefferson, a romantic rather than a realist, banked on the salvation of the new American republic through the spread of bourgeois democratic revolutions across the Atlantic to Europe, ideally leading new anti-monarchical allies to come to America’s aid.
 
In Jefferson’s analysis, the American republic could hold foreign enemies at bay and remain a decentralized, primarily rural society of free, small property-owning yeoman farmers-the ideal republican citizens in Jefferson’s mind. Jefferson feared that the expansion of federal powers, intertwined with the nascent influence of banks, was a threat to his vision of a decentralized agrarian republic.

Hamilton had planted the germ of the idea into political discourse that short term profit motive should be subordinated to the national interests of the country as a whole. This vision of a semi planned economy was not, to be clear, for the benefit of the proletariat. Rather, it was a strategy for an immature and new economic polity to hold its own and eventually prevail over much more well established and wealthy mercantile powers who had rigged the global trade system in their favor.

Hamilton’s meteoric political career was cut short with the fatal duel with Aaron Burr on July 11, 1804. This, along with the passing of George Washington in 1799, deprived the Federalist Party of respectable leadership with a national vision, leading to the party’s unraveling. Seven years later in 1811, the bank’s charter wasn’t renewed, with the deciding vote being cast by James Madison’s vice president George Clinton.

Seemingly stillborn, the American System was jolted back to life by the threat of counterrevolution. Thomas Jefferson in his later years as President began to embrace some of Hamilton’s policies, although he never admitted it as such. Jefferson’s hatred and fear of Britain, and the pragmatic exigencies of the Napoleonic wars which threatened to pull the United States into the titanic conflict between Britain and France, led him to embrace the Embargo Act of 1807, which essentially cut off the American republic from commerce with Europe as well as the British Empire.

No longer able to receive manufactured goods from Europe, private capital in the Northeastern US was forced to invest in manufacturing at home. Thousands of unemployed dock workers, sailors and merchant men became an eager labor force for the new factory system. Thus it was Jefferson who ironically played a key role in helping bring about the urbanized industrial capitalist empire he would have detested had he seen it come to its final fruition. Historian Henry Adams (descendant of John and John Quincy Adams) made the observation that “American manufactures owe more to Jefferson than to northern statesmen who encouraged them after they were established”.[4]

The British retaliated against Jefferson’s punitive trade measures by attacking American shipping, forcibly impressing American seamen into the British navy, and escalating hostilities to the point where Jefferson’s successor, James Madison, felt he had no choice but to declare war on London five years later.

The War of 1812 resulted in a series of alarming defeats for the young American Republic at the hands of the British, culminating in the burning of the White House in August 1814. The backward, poorly armed United States barely avoided catastrophe. The prospect that independence could be lost, that the Revolution could be reversed, spurred a wave of nationalism that demanded the government take measures to ensure US economic independence from the stranglehold of British domination. Even the South temporarily abandoned its sectional interests in this climate.

Henry Clay, a young speaker of the House from Kentucky of Jeffersonian Democratic convictions (the first and only to become speaker in his first term as Congressman, obtaining the position at 34), rode the wave of this new national fervor to implement what he called ‘The American System’- resting on the same essential principles Hamilton had formulated: the tariff, the national bank and ‘internal improvements’.

Henry Charles Carey, the economist most famous for providing the intellectual ammunition for the American System (and later an economic advisor to Abraham Lincoln), elaborated in his book A Harmony of Interests how this model differed from that practiced by the British Empire:


“Two systems are before the world; the one looks to increasing the proportion of persons and of capital engaged in trade and transportation, and therefore to diminishing the proportion engaged in producing commodities with which to trade, with necessarily diminished return to the labor of all; while the other looks to increasing the proportion engaged in the work of production, and diminishing that engaged in trade and transportation, with increased return to all, giving to the labor good wages, and the owner of capital good profits.

 …One looks to compelling the farmers and planters of the Union to continue their contributions for the support of the fleets and the armies, the paupers, the nobles, and the sovereigns of Europe; the other to enabling ourselves to apply the same means to the moral and intellectual improvement of the sovereigns of America.

…One looks to underworking the Hindoo, and sinking the rest of the world to his level; the other to raising the standard of man throughout the world to our level. One looks to pauperism, ignorance, depopulation, and barbarism; the other to increasing wealth, comfort, intelligence, combination of action, and civilization. One looks towards universal war; the other towards universal peace.

One is the English system; the other we
may be proud to call the American system”[5]

This time, the nation at large and the political elites were receptive to an activist government on economic matters. In rapid succession a Second National Bank was established with its headquarters in Philadelphia, and in 1816 a heavy tariff was introduced on British goods, with duties on commodities deemed threatening to American manufactures, such as iron, glass, paper, taxed at 20-30%. Thomas Jefferson, who had previously opposed such policies, expressed his support for them:

“...to be independent for the comforts of life we must fabricate them ourselves. We must now place the manufacturer by the side of the agriculturist. The former question is suppressed; or rather assumes a new form: shall we make our own comforts, or go without them, at the will of a foreign nation? He therefore who is now against domestic manufacture must be for reducing us either to dependance on that foreign nation, or to be clothed in skins, & to live like wild beasts in dens & caverns. I am not one of these. Experience has taught me that manufactures are now as necessary to our independence as to our comfort…for in so complicated a science as political economy, no one axiom can be laid down as wise and expedient for all times and circumstances…[there are] those who use their former opinion only as a stalking horse to cover their disloyal propensities to keep us in eternal vassalage to a foreign & unfriendly people”[6] (emphasis added).

The British correctly perceived the threat these new policies posed to their hold over the transatlantic economy and engaged in a form of retaliatory economic warfare against the United States by oversaturating American markets with their goods, even taking profit losses to do so. This contributed to a depression in 1819, but the country recovered in two years.[7]

Starting during the administration of James Monroe (1817-25) and accelerating during the administration of John Qunicy Adams (1825-29), a plethora of massive state sponsored infrastructure projects took shape. Clay, first as Speaker of the House and later as Secretary of State under Adams, was instrumental in marshaling political support for many of them.

The first notable example was the National Road, also known as the Cumberland Road. Beginning in Cumberland, Maryland, this road ultimately extended over 600 miles, cutting through the Appalachian Mountains into the agricultural heartland of North America. Work had already begun on the road in 1806, but it originally was to go no further than Wheeling, [West] Virginia. Clay, as speaker of the House, led Congress to fund further extensions of this road throughout the 1810’s and 1820’s, so that it finally reached hundreds of additional miles, stretching as far as Vandalia, then the capital of the new state of Illinois. This major work of public infrastructure connected the east coast with the rich agricultural valleys of the Ohio and upper Mississippi for free farmers, who poured across the mountains to settle what became the most prosperous farming region in human history.[8]
 
Another example was the Erie Canal, constructed between 1817 and 1825 under the leadership of Governor Dewitt Clinton. This canal connected the Hudson Valley, and thus the Atlantic Ocean, with the Great Lakes, circumventing the Appalachians and facilitating direct river traffic between the Midwest and the East Coast, reducing transport costs by as high as 90%.

Although not technically receiving federal funding (most of the money came from the state government of New York and private philanthropists), government assistance to this project was nonetheless crucial. Work on the canal began directly across the river from the West Point Military Academy (established by President Jefferson in 1802), which at the time was the only school in the entire United States that trained engineers. The West Point Foundry reportedly designed the locks which were crucial to the canals functioning.[9]

As New York City rapidly grew and became a flourishing global trade hub in the subsequent 20-30 years, the West Point Foundry also built much of the sewage pipe system of NYC in the 1830’s and 40’s, and in 1830 built ‘The Best Friend of Charleston’, the first locomotive for revenue service built entirely in the United States.

The Ohio and Erie Canal was built with the finances of the state government/state bank of the newly established state of Ohio between 1825 and 1832, and was surveyed/designed by the US Army Corps of Engineers under the supervision of General Simon Bernard, a Frenchman who had served Napoleon and defected to the United States after Waterloo.[10] The canal connected Lake Erie with the Ohio River, stretching over 300 miles with 146 river locks. The cities of Cleveland, Toledo, and Columbus grew along this canal route, flourishing from new direct commerce with the East Coast.

The Second National Bank played a key role in financing numerous canals, railroads and roads. Printing one quarter of the United States’ entire currency, and having 25 branches across the country, the national bank was in a unique position to provide financing to infrastructure projects of national interest, either through direct funding, buying the land upon which the infrastructure would be built, or extending credit to private actors so that they’d be willing to invest in such projects long term. Among the vital infrastructure financed by the bank was:

Delaware and Chesapeake Canal- A canal constructed between 1825 and 1829 that connected the Delaware river with Chesapeake Bay, removing a major natural obstacle to internal and international maritime commerce. The canal is still in use to this day.

Morris Canal- A New Jersey canal, constructed between 1829 to 1839, that was primarily used to transport anthracite coal from the coal fields of Pennsylvania’s Lehigh Valley to blast furnaces in New Jersey and the New York City area. The canal also transported iron ore westwards to places like Bethlehem, Pennsylvania which was the embryo of enterprises like Bethlehem Steel.

New Orleans Canal- A canal built between 1831 and 1838 to cut through swampland and connect the cities ports with the Gulf of Mexico. Slave labor was not used, but Irish migrant wage laborers were. Tragically, the harsh work conditions led many to perish from yellow fever. The canal was nonetheless so effective that it served as the city's main canal until World War II.

Reading Railroad- A railway connecting the coal producing region of northeastern Pennsylvania with Port Richmond, the single largest tidewater rail terminal in the world at the time, enabling coal exports across the world that could compete with the British coal industry.

(The information is available in a report on the national banks activities issued by a committee of financier stockholders in 1841).[11]
 
 
All these projects kick-started industrialization and stimulated commerce between the East Coast and the new territories of the Midwest, especially because they made the flow of agricultural goods, iron, coal and other raw materials of the Midwestern breadbasket/Appalachian Mountains to the coastal manufacturing hubs easier and cheaper than ever before. The mileage of railroads connecting different regions of the country went from zero to thousands of miles. The continental, land-based economy in North America began to take shape, free of the maritime trade dominated by the trade ships and war vessels of the British Empire.

By increasing the wealth and autonomous economic muscle of Northeastern and Midwestern industrial as well as agricultural capital, leaders like Clay built up the strength of their class for the looming violent confrontation with the slave holding aristocracy of the South, and its international allies.

The nature of this escalating conflict was personified by what was called the “Triumvirate”- the three giants of Congress and the Senate who dominated American politics in the second quarter of the 19th century. These men were Henry Clay, Daniel Webster, and John C. Calhoun. Clay represented the up-and-coming landholding entrepreneurs of the newly forming Western states. A slave holder himself, he nonetheless supported gradual, compensated emancipation and believed that increased interstate commerce would enable the West as well as the South to catch up to the Northeast in terms of economic development, and thus ease sectional tensions over time.

Webster represented the old established mercantile shipping interests and industrial capitalists of the East Coast. As an acclaimed Massachusetts lawyer, he had personally represented the interests of Francis Cabot Lowell, the owner of the first big textile factory in the United States Boston Manufacturing Company, and John Jacob Astor, the fur trader, opium dealer, and real estate mogul of early 19th century NYC and the USA’s first multi-millionaire. He was widely considered the wealthiest lawyer of his era.[12] An opportunist, he had at first opposed protectionist policies in the name of the dogmas of free trade, but shifted his positions when he saw that Northeastern industry would turn more of a profit in the long term by keeping British manufactured goods out of the market. In short, he represented the more cautious and conservative faction of the pro developmental bourgeoisie.

Lastly was John C Calhoun, the South Carolina Senator who represented the most reactionary interests of the Southern slave plantation owners. Historian Richard Hofstadter called Calhoun the “Marx of the Master Class”,[13] a social and economic theorist who recognized class conflict as the motor force of history, and yet for that precise reason rejected industrial capitalism which he thought gave too many freedoms to the laborers, arguing that only the ultra-hierarchical system of chattel slavery could subdue the unholy horror of class warfare.

Of the three men, Clay was the most forward looking, seeing in the American System not only a good development plan for the United States, but the beginning of an entirely different global economic order. Clay foresaw an interconnected economy of mutual prosperity spanning the entire Americas, free of the fetters of feudalism, colonialism and hereditary privilege that weighed down the Old World. As Secretary of State under John Quincy Adams, Clay vocally supported the freedom struggles of Simon Bolivar in South America, and also supported American recognition of the revolutionary Republic of Haiti, to the scandalization and horror of most Southern slave owners.[14]

The American System more or less prevailed from 1816 to around 1833 and gave American industrialization a vital boost, but was derailed by a reactionary backlash represented by the rise of Andrew Jackson to the presidency. Jackson represented all the worst aspects of Jeffersonianism without any of its redeeming qualities. A narrow-minded parochial champion of petit bourgeois interests in cahoots with parasitic finance capital centered in New York, Jackson utilized vulgar populism to bring down Clay’s national bank, claiming that it was a corrupt institution unfairly favoring certain politically connected business interests over others, stifling American capitalist meritocracy.

The two hammer blows to the American System came in 1832-33. First, in 1832, the Southern slave owners, led by Calhoun, effectively blackmailed the rest of the country into rolling back the protectionist tariff. South Carolina threatened to secede unless the 1828 protectionist tariff, called by Southern demagogues ‘The Tariff of Abominations’, was repealed. Calhoun considered the high tariff a Northern plot to economically ruin the South, just one step removed from emancipating the slaves- to him, the tariff and abolitionist agitation were one and the same (‘While the tariff takes from us the proceeds of our labor, abolition strikes at the labor itself’ Calhoun said).[15]

Although President Jackson’s threat of using military force cowed the secessionists into not crossing the final red line, the Northern bourgeoisie gave in to the threats. Clay (by now a Senator) and Webster crafted the Compromise of 1833 whereby the 40% tariff on manufactured imports would gradually be lowered to 25% over a period of several years. Passionate as Clay was in support of the American System, he prioritized preserving the Union above all else. His enemies did not.

Then came the great attack on the national bank. Under the direction of his Secretary of the Treasury Roger B Taney (the later Supreme Court Chief Justice infamous for the pro slavery Dredd Scott decision), the national developmental bank was drained of its funds, the funds were put in local state banks run by Jackson’s political cronies (described by Whig critics as ‘pet banks’), who instead of spending the funds on internal improvements, spent the money on land sales to those settling the West.[16]

In the subsequent ‘free banks’ era from 1837 to 1863, the average life expectancy of a bank was five years, given reckless speculation and lack of a sound currency.[17]

Despite Jackson’s reactionary sabotage, the American System lived on at a state level, with Northeastern and Midwestern state governments led by the Whigs putting up the money for internal improvement projects. One of the most prolific politicians in this endeavor was the young Abraham Lincoln, who in his eight years in Illinois’s state legislature(1834-1842) succeeded in pushing through legislation creating a State Bank of Illinois, as well as appropriating 8.5 million dollars in state funds for the creation of the Illinois and Michigan Canal which connected the Great Lakes with the Mississippi river basin.[18]  Such was his enthusiasm for this project that he served on the state commission overseeing the canal's construction. The canal diverted trading activity from southern and central Illinois to Chicago which sat where the canal connected to the Great Lakes, leading to Chicago’s meteoric rise into the Midwest's greatest metropolis.
 
This and other projects only widened the gap between the development of the productive forces of the Northeast and the Midwest vis-a-vis the South, leading to the slavocrats' position being weakened in the economy. Their only hope lay in a rigged political system that granted disproportionate representation through the Senate and the Supreme Court, and failing that, the threat of civil war and possible British intervention on their behalf. 

The Whigs led by Clay attempted in vain to re-implement the American System on a national level. Jackson was followed by Van Buren, who was ruined politically by the economic crash of 1837, brought about in part by usurious interest rates at the hands of Wall Street and local banks no longer restrained or regulated by a national bank. William Henry Harrison, a Whig, was elected in 1840 but died after only a month in office, leading to him being replaced by his running mate John Tyler. Tyler treacherously abandoned his own party's platform once in office and sided with the Jacksonian Democrats in vetoing a new national bank (which resulted in a riot by Clays supporters in front of the White House). In a final rally for the nationalist cause, Whigs in Congress passed a protectionist tariff in 1842 over Tyler's veto. Clay then ran for President in 1844 against the rabidly pro free market, pro slavery expansionist James K. Polk and narrowly lost. Abraham Lincoln and other Whigs charged, on the floor of Congress, that Polk had been elected with financial and propaganda assistance from the British.[19]

Jacksonian Democrats hammered the nail in the coffin to the American System when they passed the Walker Tariff in 1846, the most pro free market tariff measure passed to date. They also embarked on a predatory war of conquest against Mexico to expand the territories available for slaveholders. Although there was a temporary economic boom with the explosion of land speculation following the annexation of vast Mexican territories, lack of regulation of interest rates led to a major economic crash in 1857, bringing Northern factory owners to the point of ruin.

The newly annexed Mexican territories reignited the slavery controversy, due to disagreements over whether slavery would be allowed into these western lands or not. Senators Clay and Webster, summoning all their rhetorical and political gifts one last time, crafted the Compromise of 1850. The agreement admitted California as a free state and banned the slave trade in the nation’s capital Washington DC. However, to placate the South, it also included the hideous Fugitive Slave Act, which gave license to Southern slave patrols to pursue runaways in Northern states. Thus, an illustrious career in public service ended in disgrace for both men. The only good thing that can be said about the compromise is that it gave the North another ten precious years to industrialize further and prepare for the coming storm.[20]

In 1852 both Henry Clay and Daniel Webster died within months of each other, depriving the Whig Party of its most able leadership. Simmering sectional differences over slavery, kept at bay for over 30 years, could no longer be suppressed. The ‘Conscience Whigs’, tired of their party’s compromises with slavery, broke from the party, forming the nucleus of the new Republican Party. The pro slavery faction, the ‘Cotton Whigs’, joined the Southern Democrats.
 
The newly ascendant Republican Party represented the consolidation of a cross class alliance between Northern industrial capitalists, workers, Midwestern free farmers and a small but growing group of reformers and abolitionists to push the Slave Power off its throne. Their ranks grew until they triumphed in the election of 1860.

With the election of Abraham Lincoln in 1860, the industrial bourgeoisie was finally able to capture the commanding heights of state power. In 1861, the Morrill tariff was passed, which reversed the free trade policies of the previous 15 years, to the great boon of Northern industry. A single centralized national bank was not re-established, but on the advice of Lincoln’s economic advisor Henry Charles Carey, a nationwide network of Federal banks in each state was created, issuing ‘greenback’ paper money backed by the federal treasury and creating a standardized fiat currency. The state banks were heavily taxed to discourage competition with the federal banks. This made raising money for the upcoming war effort far more efficient.[21]

In response to the loss of its power, the Southern slavocracy seceded and made war, declaring itself the Confederacy (whose constitution, in addition to codifying slavery into law forever, included a provision forbidding the government providing funding for internal improvements).[22]

The process of economic decoupling from Britain was completed when the slavocracy was crushed at the cost of 750,000 lives in four years of brutal civil war. The decisive blow was inflicted by the slaves themselves in the ‘General Strike’ eloquently described by W.E.B. Dubois in Chapter 4 of Black Reconstruction, in which hundreds of thousands of runaways fled to the Union lines, depriving the plantation system its vital labor force, and providing 200,000 additional soldiers to crush the rebellion, tipping the balance of forces decisively for the Union cause.

In the immediate post war period, the Northern bourgeoisie was faced with a dilemma. The emancipation of the slaves meant that they no longer counted as three fifths of a person, but a full person in the eyes of the law. This meant increased Southern representation in Congress. Without black suffrage and votes, this opened the door for unreconstructed reactionaries from the ranks of the just recently defeated planters to take seats in the new Congress. The Northern business interests didn’t care one way or another about black suffrage, but they knew such a Congress would lift the tariff and attack other policies the industrialists prized deeply. If there had been an industrial bourgeoisie in the South for their Northern counterparts to make common cause with against the Southern oligarchy, they would have done so. But given the South’s extreme underdevelopment, the only available ally that could produce Southern state governments aligned with Northern capital was the newly emancipated black proletariat, along with some Unionist white proletarians.[23]

The Northern industrial capitalists made a move unprecedented in any bourgeois revolutionary process- they backed, with the full force of the United States military, a dictatorship of the proletariat in the American South. The political and military leadership of the defeated Confederacy, the Southern nobility, were denied the right to vote and hold political office. The American Revolution, in its final culmination, resulted in the brief but unprecedented acquisition of state power for laboring people, backed by the bayonets of the United States Army. Three years before the Paris Commune, fifty years before the Bolsheviks stormed the Winter Palace in Russia.

Central to this new order was the establishment of the Freedmen's Bureau in the reconstructed South, a federal government entity under the command of the War Department with broad powers to provide food, clothing, shelter, and other welfare programs for emancipated blacks, build schools and educational facilities for the freedmen and poor whites, defend the voting rights of the freedmen, provide an alternative court system for the freedmen, run a government bank for the freedmen’s finances, and rebuild the damaged infrastructure of the war torn South.

Dubois described this massive government agency, the first of its kind ever entrusted with such wide-ranging authorities, as a proto socialist institution, the embryo of a true workers republic. Had it been allowed to grow unimpeded, it had the potential to become a “vast and single eyed dictatorship [that] could guide us up from murder in the South and robbery and cheating in the North into a nation whose infinite resources would be developed in the interest of the mass of the nation- that is, of the laboring poor.”[24]

The forces of reaction gathered against this nascent workers power in the form of the Ku Klux Klan, the White League, the Red Shirts and other paramilitaries. These organizations constituted the shock troops of the decayed remnants of the deposed Southern planter oligarchy, as well as the upcoming new Southern bourgeoisie drawn from the ranks of former slave overseers and traders. This was an alliance of declassed aristocrats and lumpen against the workers, in essence a form of proto fascism. They waged a terrorist Contra war against the proletarian dictatorship, murdering thousands of black men and pro Reconstruction whites.

In 1876-77 they triumphed, when the Northern bourgeoisie pulled the rug out from under the proletariat of the South and came to a gentleman’s agreement with the Southern reactionaries in the infamous Compromise of 1877, in a private meeting held at the Wormley Hotel in Washington DC. According to progressive Southern historian C Vann Woodward,[25] the nascent new Southern bourgeoisie was promised Northern investment in canals, railroads and bridges to rebuild their war damaged economy. In exchange, Radical Reconstruction was to end and the black proletariat stripped of its political power, and all federal troops protecting their rights were to be withdrawn.

The black proletarians of the South were thrown to the wolves of lynch mob terror and disenfranchisement, while the Northern industrial interests (especially the railway giants) acquired what they wanted- domination of the vital economic infrastructure of the South. Thus the South went from being a source of raw materials for Britain to being a source of raw materials for the industrial hubs of New York, Pennsylvania, Ohio, Michigan and Illinois, lorded over by the Vanderbilts and the Carnegies.
 
Thus, the real counterrevolution in American history was not 1776 but 1876. The bourgeois democratic revolutionary project which had begun in 1776 had at last achieved full independence from British domination both direct and indirect, had rid itself of comprador traitors to national liberation, and stood on the precipice of a social republic built on the uplift of all workers regardless of skin color.
 
Instead, the ascendant industrial mega bourgeoisie set up a new dictatorship of banking/steel/railroad/mining/canal monopolies. It was at this moment that the American bourgeoisie ended what revolutionary role it had and became yet another predatory imperial powerhouse, glutting itself on the labor and resources of its own working class North and South, and later, much of the world.

The tragedy of the defeat of the dictatorship of the proletariat in the South is that it occurred just as the labor movement in the North was coming into maturity. In the summer of 1877, the United States was rocked by a massive rebellion by railway workers, the largest in American history. Upwards of 100,000 laborers took part in a spontaneous explosion against starvation wages, unemployment due to the depression of 1873, and dangerous working conditions. Half of all freight being carried by trains in the US came to a halt.[26] In Chicago, Pittsburgh, Baltimore and other cities, workers battled with strikers and company goons. St. Louis was briefly governed by a workers' soviet in July 1877, led by the Workingmen's Party of the United States, an early US Marxist organization. President Rutherford B. Hayes, who had taken office thanks to the Compromise of 1877, called out the army to crush the rebellion, killing 100 people nationwide and injuring/jailing thousands. The very federal troops which were enforcing the dictatorship of labor only months earlier immediately turned their guns around in defense of the dictatorship of capital.

Had the proletarian power in the South not been crushed under heel, they may have linked arms with the emerging proletarian behemoth of the North and changed the trajectory of the distribution of the spoils of America’s burgeoning industrial empire. The cause of economic democracy for all Americans, black and white, was set back for sixty years, until the Franklin Roosevelt era (which will be addressed in the next article).

The case of China

Just as the American Revolution of 1776 was an arguably premature bourgeois revolution in a society where the industrial capitalist class was weak, so the Chinese Revolution of 1949 was an arguably premature socialist revolution in a country where the modern urban proletariat was small and barely formed in most areas outside a few coastal ports, with the overwhelming majority of the population being serfs who worked the land in feudal power relations. In addition to this, the nation had been devastated by thirty seven years of continuous warfare- ten years of fighting between rival warlords, then ten years of fighting between the Communists and Chiang Kai Shek’s Nationalists, followed by eight years of a war of national self-defense against the Japanese, and finally another four years of renewed fighting between the Communists and Nationalists.

As a result, Mao Zedong did not advocate an immediate transition to full socialism at first, but a period of ‘New Democracy’- a transitional state whereby the proletariat and peasantry would govern in cooperation with the urban petit bourgeois and the national bourgeoisie (capitalists who had opposed China’s subordination to foreign powers). Known as the ‘Bloc of Four Classes’, these classes had allied with each other in opposition to feudalism and imperialism. Mao did not specify how long this period would last, saying that it would “need quite a long time and cannot be accomplished overnight. We are not utopians and cannot divorce ourselves from the actual conditions confronting us.”[27]

The assumption behind the policy of New Democracy was that with the assistance of its sister Communist giant the Soviet Union, the People's Republic would industrialize and with time, would be able to achieve a developed socialism- ‘the Soviet Union’s present is our tomorrow’ being a popular slogan of 1950’s China. Until that time, a certain level of private enterprise would be tolerated, and foreign investment from capitalist countries allowed, provided it ‘did not dominate the economic livelihood of the people’.[28] In this time, relations with the USSR were amicable, and the Soviets assisted in providing money, technical/engineering expertise, and materials for 150 major industrial projects in China- mostly in the sectors of energy, manufacturing, and extraction of raw materials. This became the core of modern China’s industrial base.[29]

During 1957-60, this period of a mixed economy ended when Chinese relations with the USSR went south. Khruschev’s 1956 Secret Speech denouncing Stalin was seen by Mao as an ideological capitulation to Western imperialism. Mao publicly denounced the Soviets as betrayers of the communist project. A war of insults between Moscow and Beijing escalated, and thousands of Soviet technical, engineering and scientific advisors were abruptly withdrawn from China in July 1960, many in mid-project, crippling China's development at a crucial moment.[30] Coupled with an American embargo and nuclear threats, China was confronted with the prospect of developing in extreme isolation from both the Eastern Bloc and the capitalist world. From that point forward, China took its own independent path.

From the mid to late 1950’s until his death in 1976, Mao took a turn towards state socialism, which was largely an autarky. To be certain, enormous accomplishments were achieved in this period. Literacy rose from 20% to 90%, no worker or farmer went without healthcare, the average life expectancy rose from a mere 32 years to 65 years in a generation. For those who want to separate the Mao and subsequent Deng period as two entirely different phenomena, the fact remains that without the education of the population and the beginnings of industrialization of China, the subsequent reforms by Deng Xiaoping would not have taken off in the form that they did. Mao uprooted not just feudal relations but semi colonial dependency in a manner that never occurred in India, Indonesia, the Philippines, Thailand, or elsewhere in Asia.

This progress, while substantial, was almost derailed by Mao’s deepening slide into ideological rigidity over pragmatic considerations, which reached a crescendo during the Great Proletarian Cultural Revolution. To what extent the worst excesses of the GPCR were the result of Mao himself, the result of Mao falling under the sway of the Gang of Four (which included his wife, Jiang Qing), or somewhere in between is something no one can tell for sure. Suffice to say that a large segment of the party vanguard was seized by a paralyzing fear of fifth columnists and traitors to socialism from within, and the hunt for turn coats turned all China upside down.[31]

The ultra left Red Guards who were followers of the Gang of Four, while extremely politically far removed from Andrew Jackson’s Democrats and the Southern oligarchy of the 19th century US, nonetheless played a similar destructive role towards China’s socialist development as the former did towards America’s bourgeois economic development. The Gang of Four fetishized the peasant masses as the source of untainted revolutionary virtue, much as the Jackson Democrats fetishized the farmer and the small property owner as the vessel of bourgeois democratic purity. The Gang of Four’s belief that ideological fealty to communism in the abstract would achieve an ideal form of socialism mirrored the Jacksonian Democrats zeal in unleashing liberal market forces without restraint or a plan. Appeals to ‘the market’ and ‘the masses’ functioned as thought terminating cliches that evaded concrete strategy or planning. In reality, the objective actions of both slowed the industrialization of both new republics and crippled their development.

The Red Guards of the Cultural Revolution’s violence was directed inwards at ‘capitalist roaders’ and ‘imperialist running dogs’ (many of them loyal Communists who ran afoul of demagogues), while the Jacksonian Democrats violence was directed outwards towards Native Americans, Mexicans and others who dared to stand in the way of Manifest Destiny settler colonial expansionism. The most fervent advocates of ‘Democracy’ and ‘Communism’ in rhetoric proved to be most destructive towards both political projects in practice.

Not only were millions humiliated, persecuted and in a number of cases killed, but the very foundations that the People’s Republic were built on were destabilized. The urban petit bourgeois intelligentsia was severely persecuted during the Cultural Revolution; as anyone who had been an educated specialist before the Communists took power was treated with suspicion. When Zhou Enlai, Mao’s foreign minister (who had been seen as sympathetic to the intelligentsia’s plight) died in April 1976, his funeral in Tiananmen Square turned into a mass demonstration led by intelligentsia elements against the Gang of Four, and by extension against the Communist Party itself.[32] If the Party lost the support of this strata, China’s prospects of economic development would be quite bleak. There was a serious legitimacy crisis.

Only a month after Mao died, the Gang of Four were toppled from power, arrested, and jailed. Just as the American Revolution underwent a ‘course correction’ with the establishment of the American System in 1816 and then again in 1860 with the election of Lincoln, so the Chinese Revolution underwent a course correction in the late 1970’s and 1980’s with the rise to the fore of three remarkable leaders in particular: Deng Xiaoping, Chen Yun, and Li Xiannian. In that order, they are generally considered the three most powerful figures in China in the last two decades of the 20th century.

Deng Xiaoping was originally from a middle level landowning family in Sichuan. As a teenager he had studied in France and acquired experience in mechanics at a French factory. Returning to China, he joined the Communists in their fight against warlordism and foreign imperialists. He achieved distinction as a military commander in the Long March and in the One Hundred Regiments campaign against the Japanese in World War II. In Mao’s revolutionary government he served as an economic planner, where he tried to emphasize a focus on more consumer goods and using prices as an indicator of enterprise’s success. These views led him to be accused of being a ‘capitalist roader’ by the Gang of Four. He was exiled into the countryside for his ideological ‘mistakes’, and his eldest son was severely beaten by Red Guards and crippled for life when he threw himself out of a window trying to escape his torturers.[33] After the arrest of the Four, Deng was allowed back into politics, and quickly became the most powerful man in the party.

Deng Xiaoping was the strategist who charted the path by which the PRC could stave off internal counterrevolution as well as develop its internal productive forces, which included selectively opening sectors of China’s economy to foreign capitalist investment in the so called SEZ’s (Special Economic Zones). These zones, with their low taxes, lax regulations and less restrictions on foreign enterprises, were meant to attract foreign investment in China and thus acquire badly needed revenue for the Chinese state. The first four SEZ’s were established in Guangdong, Shenzhen and Fuijan in southern China in 1979.[34] Five years later, 14 additional ports were designated SEZ’s as well, and more were added in the coming decades. These islands of capitalism, where economic activity was monitored but not dictated by the Communist Party, became important engines of China’s growth.

Why did Deng pursue this strategy? An explanation is needed.

State socialist projects of the 20th century were bedeviled by the following conundrum: Since they took power in extremely impoverished, semi feudal nations where the local bourgeoisie was relatively weak (‘weak links in the chain’ as Lenin famously said), how could they sustain continuing economic growth? The Soviet model of top to bottom state control was extremely effective at helping underdeveloped countries clear the initial hurdles of industrialization, eliminate extreme poverty and spur modernization which Third World capitalist countries could only dream of.  However, in nations where Communists were in power long enough, after those tasks were achieved such systems had a tendency to stagnate 30-40 years down the line.

Because their economies were nationalized, such states were almost completely closed off from commerce with much of the world, and kept to trading with fellow socialist states for ideological reasons, thus lacking the capital to develop further. The pie was evenly divided, but it was a relatively small pie. As Deng explained:

“When a backward country is trying to build socialism, it is natural that during the long initial period its productive forces will not be up to the level of those in developed capitalist countries and that it will not be able to eliminate poverty completely. Accordingly, in building socialism we must do all we can to develop the productive forces and gradually eliminate poverty, constantly raising the people’s living standards… If we don’t do everything possible to increase production, how can we expand the economy? How can we demonstrate the superiority of socialism and communism?”[35]

Deng’s point was that while orthodox Marxism Leninism had succeeded in proving existing socialism was superior to capitalism in the developing world, in living standards they were still far behind the developed capitalist West and Japan. Socialism would not triumph in the world unless it broke through to that next level. To do that, a departure in orthodoxy was needed. If markets were necessary to stimulate the forces of production, they should be used. As Deng’s famous expression went ‘it does not matter if it is a black cat or a white cat, as long as it catches mice’.

Deng encouraged China’s engineers, economists, technicians and intellectuals to learn everything they could from the capitalist world in terms of technical expertise, laws of supply and demand, and manufacturing design. Even the expertise of the World Bank, the arch neoliberal institution, was consulted.[36] One of the greatest sources of inspiration was Japan’s economic model, which although capitalist, had significant state ownership, major trade barriers to protect domestic manufacturers, and was closer culturally to China than Western capitalist nations. Deng was able to look past the enormous death and destruction Japan had inflicted on China (Deng himself had served as a military commander against the Japanese in World War II), to objectively study what had made their country prosperous, and instructed the party vanguard to do the same. Full scale Japanese factories were built in China for the purposes of training the Chinese in Japanese production techniques.[37] (This is not unprecedented by a Communist state. Stalin hired engineers and specialists from the Ford company to assist in building Soviet factories during the USSR’s industrialization drive in the 1930’s. Stalin even said that ‘The combination of Russian revolutionary sweep with American efficiency is the essence of Leninism in Party and state work.’).[38]

It is worth noting that Japan’s paternalistic capitalism was built from the Meiji period (1868-1912) onward by Japanese leaders and economists inspired by the protectionist ideas of the German economist Friedrich List, who in turn had been influenced by Hamilton and Clay. Thus, in an indirect, roundabout fashion, the American System did influence Deng.[39]

Not as well-known as Deng, but widely considered the second most powerful political figure in China throughout the ‘reform and opening up’ period, was Chen Yun. Li Xiannian was the third most powerful.[40] Both came from comparatively more humble backgrounds than Deng.

Chen Yun had been an urban worker in Shanghai, working in a publishing house from the age of 15. He became a union organizer and organized a strike five years later, joining the Communists around this time. In 1925, he witnessed British colonial troops massacre striking Chinese laborers. He became an urban guerilla and fought Chiang Kai Shek in an underground capacity. Such experiences made him deeply hate and distrust Western imperialism and capitalist exploitation for the rest of his life. As a statesman, he refused to even meet with Western leaders.[41]

Eventually escaping to the countryside and linking up with Mao, Chen Yun rose to prominence in the Party because of his talents as an economic planner and a rigorous attention to detail. He was put in charge of economic management of Harbin, the first major industrial center to come under the control of Communist forces, and his methods there became a model for Communist management of production in every city they occupied. When Mao took Beijing, he was put in charge of managing the national economy. He was most notable for cracking down relentlessly and successfully on illegal speculation and succeeded in bringing down inflation. When Mao enacted disastrous policies during the Great Leap Forward, it was Chen Yun who saved the day, instituting reforms that helped the economy recover in the early 1960’s.[42]

In this period Chen Yun introduced material incentives for increased productivity and stressed economic growth goals as opposed to ideological ones. A famous phrase of his from the time, which he used a lot more later, was that market forces could be like a ‘bird in a cage’- allowed to operate within certain limits, but always boxed in by the party and the state.  This made him a target of criticism during the Cultural Revolution as a ‘capitalist roader’, although Chen Yun was skilled at avoiding direct confrontations or overtly contradicting party leadership in a way that would get him into trouble.

After the downfall of the Gang of Four, Yun was initially supportive of Deng’s market reforms, but in the early to mid-1980’s he was increasingly critical. He denounced the evils of capitalism the SEZ’s brought with them- drugs, prostitution, pornography, gambling, and parasitic financial speculation.[43] He was instrumental in the campaigns ‘Against Spiritual Pollution’ which pushed back against Western values of liberal individualism and consumerism, and reasserted the overall authority of the Party even as economic changes were underway.

Li Xiannian, like Chen Yun, came from a humble background, being born to an impoverished peasant family in Hubei. He distinguished himself as a commander in the Huai-Hai campaign of November 1949-January 1949, the decisive battles of the Chinese Civil War which broke the back of Chiang Kai Shek’s army. From 1954 onward he was the Minister of Finance in the Communist government. He and a number of leading Communist officials were known as the ‘February Countercurrent’ in 1967 who opposed the fanaticism of the Gang of Four and criticized them for destabilizing the country. Xiannan was closely aligned with the so-called ‘oil clique’ whose power base was the Daqing oil fields, the single largest petroleum reserves within China. These generals (most notably Yu Qiuli), out of both Communist convictions and Chinese nationalist sentiments, were big proponents of the state run sector, especially in energy. Due to the Daqing fields providing for so many of China’s energy needs after the break with the USSR, Li and Yu exerted great influence.[44]

Under the influence of Chen Yun and Li, important sections of China’s economy remained under the control of the state, especially energy and heavy industry. The 1950 Land Law made all land the collective property of the Chinese people and nation and remained in effect (private entities cannot own land, they can only lease it from the state. Revisions in the law in the 1980’s made it possible to own buildings but not the land the buildings are on, and private property can be nationalized at any point if the state deems it necessary). Perhaps most significantly, China’s largest banks remained under state control, meaning that access to hard currency was (and still is) a state monopoly, forcing private enterprise to rely on the state for good credit. These are the parameters of the ‘cage’.

Deng, Chen and Li had different power bases they appealed to and spoke for- Deng appealed to the urban petit bourgeoisie that approved of market reforms, meanwhile Chen Yun and Li Xiannian spoke for the masses of workers and farmers who were loyal to the core socialist values of the revolution and skeptical of the West. By creating a vibrant consumer economy, Deng slowly but surely won back the loyalties of the urban petit bourgeois and intelligentsia to the Communist Party. Thus Deng tried to accelerate the reforms, while Chen and Li reigned them in and limited their scope (and by extension, pushed back on the efforts of even more right wing proponents of market reforms like Zhao Ziyang and Hu Yaobang, who wanted to take the reforms in an outright laissez-faire direction).

The dialectic between these opposing forces ensured that the market reforms went ahead, but slowly and controlled enough that the socialist state was able to absorb them and not get overwhelmed. Deng and Chen Yun were the Communist equivalents to Clay and Webster, the innovative risk taker and the conservative reformer. Deng's faction was described as the ‘builders’ while Chen Yun and Li Xiannian were called the ‘balancers’.[45]

Deng, Yun, and Xiannian’s tenures are the bridge between China’s first revolutionary generation led by Mao and the current revolutionary generation of Xi Jinping, just as Henry Clay was the bridge between the original Founding Fathers and Lincoln. Just as Hamilton and Clay departed from free market liberal orthodoxy to make the American republic’s economy one that could compete with Britain, so China under Deng departed from what had been Marxist Leninist orthodoxy up to that point to survive, and prevail over the Washington consensus.

The reforms, while benefiting the port cities and creating entirely new ones (most famously Shenzhen), nonetheless created a huge gap in living standards and economic development between China’s coastal cities and the countryside, an imbalance which was deep and pronounced by the time both Deng and Yun both died in the mid 1990’s. This was reversed in the wake of the 2008 recession, when due to the economic downturn in the West, China’s export industries suffered and faced mass layoffs.

Thanks to the fact that public planning remained in command, 27 million workers were transferred from export sector industries to building infrastructure in China's interior provinces. Using the immense capital accumulated from three decades of Western and Japanese investment, the Chinese state starting in 2008-2009 invested 4 trillion yuan (over $500 billion) in infrastructure and social spending.[46] An enormous drive in internal improvements began. Between 2008 and 2020, 18,305 miles of high speed rail have been constructed in China under the direction of the state run China Railway Rolling Stock Corporation.[47] The scale of the transportation boom is something unseen since the rise of the railroad in the United States from the 1830’s-1870’s. By contrast, the Western capitalist nations responded to the 2008 crisis with cuts to the welfare state, social spending, and increasing austerity to the working class, simultaneously giving enormous bailouts to unproductive finance capital.

To this day, China maintains an economy which many observers describe as ‘mercantilists’ or ‘neo-mercantilist’. Many aspects of the American System, which the United States itself has long since abandoned, can be seen in Beijing’s contemporary economic practices. These include:

Heavy tariffs on foreign imports to protect its own industries- the average Chinese tariff on imported foreign goods was 9.6%, while the USA’s was just 3.5%. For computer and video technology the tariffs were 20-30% or higher.[48] In response to Trump’s trade war in 2018-2019, China raised its average tariff on American imported goods to 20%.[49] In addition to tariffs, China uses heavy documentation requirements and selectively applied bureaucratic red tape to discourage imports of various forms of machinery and technology which are technically allowed.

The Chinese state also heavily subsidizes its own exports, even though this is against the rules of the World Trade Organization (which China is officially a member of). China’s steel industry has gotten billions in subsidies from state run banks (the United States took legal action against China within the WTO in an attempt to stop this practice). Clean energy industries such as solar and wind power have gotten similar state support.[50]

The core of this Communist mercantilism, which enables this artificial subsidization, is China’s state run banking system, which is largely concentrated in the ‘big four’: Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and the Bank of China, With nearly 19 trillion in assets they dwarf the total assets of JP Morgan, Bank of America, Wells Fargo and Goldman Sachs combined.

The American System for Eurasia and beyond

In November 2012, Xi Jinping became the General Secretary of the Chinese Communist Party. Xi immediately moved to address some of the long festering contradictions in the PRC’s construction boom that had been unleashed from 2008 onwards. The main one was corruption within the Party, caused by many high-ranking Party members taking bribes from private actors in exchange for their approval of building and development projects. This was a threefold problem: first, it damaged the Communist Party’s trust amongst the masses and undermined its legitimacy, second it blurred what should have been an iron wall between the private sector and the state, third and most serious of all, it constituted a dire national security threat, since a number of these corrupt officials were also in the pay of the CIA, giving foreign intelligence access to the government’s innermost secrets.[51]

The latter was of particular concern given the changing international political climate. The US had tolerated the PRC and even aided its rise in the 80’s to a degree because of the Late Cold War strategy of propping up China against the USSR, and with the exception of the 1989-92 period around the Tiananmen crisis, the US had refrained from overt efforts to encourage regime change in Beijing from the 1980’s to the 2000’s. This had provided the PRC breathing room for its experiment in market socialism. In 2012 this all changed with Obama’s declaration of a ‘Pivot to Asia’. The reallocation of US troops to Asia and the Pacific from the Middle East in that year began a massive decade-long US military buildup confronting China. It thus became imperative that Beijing rid itself of its own fifth column at home while simultaneously breaking out of Washington’s military, diplomatic and economic encirclement.

The ‘Tiger Hunt’ of 2012-2022, as it’s been called, resulted in the prosecution, jailing and expulsion from the Party of 2 million members- the greatest turnover in Party membership since the Cultural Revolution. This included over 120 high ranking officials, among which were several current and former members of the Politburo. Five of them were heads of state-owned enterprises who were illegally selling off or leasing state run assets for a price, and/or enriching themselves off of rent seeking at the state’s expense.

Thanks to the Tiger Hunt campaign, Party and government officials were increasingly reluctant to enter into any sort of partnership with private entities, especially in the areas of real estate, to avoid even the appearance of corruption. Thus the state owned enterprises achieved new pre-eminence, and took over considerable areas of the economy which had been private up to that point.[52] With the state owned enterprises under the watchful eye of the powerful Central Committee for Discipline Inspection (the anti-corruption organization tasked with investigations), the ability of the capitalists to buy influence within the Party and undermine its role as the vanguard was crippled.

The economic and political rearguard secured, Xi and his allies were able to implement the breakout strategy called The Belt and Road Initiative. A multi decade, $4-8 trillion project, this program of building infrastructure and economic corridors aims to create an alternative network of commerce that completely bypasses the Atlanticist economy that’s dominated the globe for centuries. Given overwhelming US naval power, China has a great interest in investing in land-based trade routes that cannot be potentially disrupted by a US naval embargo (especially the vulnerable Straits of Malacca), as well as giving countries China has an interest in deepening relations with, such as Russia and Iran, a direct line to China. The first great linkage across Eurasia has been the New Silk Road railway completed in 2016, stretching over 6,000 miles from Yiwu City in Zhejiang province in eastern China to Tehran in Iran- making it possible to deliver freight goods in only 14 days, 30 days shorter than delivery takes over sea. The second has been the China-Pakistan Economic Corridor, an 1,864 mile network of roads, railroads, power plants and electric lines that directly connects China to the Indian Ocean via Gwadar, one of the world’s largest deep water ports (this network now accounts for one quarter of all Pakistan’s electricity).[53] Gwadar is one of the so-called ‘String of Pearls’, a network of Chinese financed ports stretching from Myanmar to Kenya. The BRI has built over 3,700 miles of roads and railroads each in Africa alone, almost 20 ports and over 80 power plants.[54]

Much of the financing for these mega projects is carried out by the Asian Infrastructure and Investment Bank, founded in 2016 and headquartered in Beijing. After the World Bank, it is the single largest multilateral investment institution on the planet. It is truly the developmental infrastructure banking institution of the World Island (Eurasia and Africa) that the likes of Hamilton and Clay only envisioned for the Americas but never achieved. The economic opportunities offered by the bank are so lucrative that even close US allies such as the UK and Germany are members of the bank, along with the overwhelming majority of Asian and African nations.

There have, however, been setbacks. The trade war unleashed by the Trump administration in 2018 (which continues under Biden), landed several blows against China. The COVID pandemic slowed, but did not stop, China’s economic growth, forcing Beijing to abandon or at least scale back several major projects. Political turmoil in Sri Lanka resulted in the overthrow of the Beijing friendly government in 2022, putting the future of the Hambantota Harbor port, which Chinese companies have a majority stake in, in jeopardy, ultimately imperiling the entire ‘String of Pearls’. Russia’s war with the collective West puts attempts to extend the Belt and Road through Russia to Europe on hold, possibly permanently, although the China brokered peace agreement between Saudi Arabia and Iran holds out the possibility of the BRI extending deeper into the core oil producing region of the world, further threatening the dominance of the US petrodollar.

As Xi Jinping stated in his speech during the trade war on May 20, 2019: “We are here at the starting point of the Long March where the Red Army began its journey. We are now embarking on a new Long March, and must start all over again”. In August of 2023 the BRICS countries (Brazil, Russia, India, China and South Africa) will enter into discussions about an entirely new currency separate from the US dollar, its value based on rare earth minerals in China and Russia.[55]

China studied and learned from the World Bank, so it could build institutions capable of surpassing and supplanting the World Bank. The short-term investment opportunities the opening of China presented to Western multinationals blinded them to the fact that they were building up a mortal enemy.

A Note on Contrasts

An obvious difference between the two revolutions is that China's developmental process was (and is) guided by a single party, while much of the American revolutionary trajectory was operating in the context of a two-party system. It was not necessarily destined to be so. George Washington, John Adams and numerous other founders made statements to the effect that there shouldn’t be a competitive party system in the United States at all, fearing that factional infighting would doom the American republic to collapse the same way the Greek and Roman republics had. The Federalist and Whig parties attempted and failed to be the guiding parties of America’s bourgeois developmentalism. They faltered in the face of the narrow sectional interests of the South that increasingly dominated the Democratic Party, leading to a crisis that eventually could only be resolved through a civil war that very nearly torpedoed the entire experiment.

China’s process of socialist development being led by a Marxist party, with a well worked out ideological line and iron discipline, has been both a blessing and a curse. It was a blessing in the initial victory of China’s national liberation when the feudalists were crushed, but became a curse when the party apparatus was taken over by the fanatics of the Gang of Four. After the purging of the Gang, however, the CPC was able to make effective long term economic plans. China has capitalists and comprador elements in league with foreign finance capital, but given the nature of China’s system, they have not been able to consolidate into a politically independent and active element, like the Democrats in the antebellum US did.

The World Historic Place of the American and Chinese projects

In conclusion, we may assess the world historic impact of the American and Chinese revolutions by laying them side by side with their sister bourgeois and socialist revolutions, the French and Russian revolutions, respectively. Each has played a roughly analogous role in the global transition from feudalism to capitalism, and from capitalism to socialism.
 
Revolutionary France, like the Soviet Union, took on the old order it was struggling against in the form of a full-fledged, frontal attack. Revolutionary/Napoleonic France was at war with its aristocratic and feudal enemies throughout nearly the whole of its existence, from 1792 to 1815. Its strategy for victory hinged on full mobilization of the entire French nation against the decadent nobility of the Hapsburgs, the Prussians and the British, while swelling its ranks with emancipated peasants as French armies marched across Europe.

The Russian revolutionary experiment likewise can be seen as a series of military assaults that expropriated the resources of one enemy after another to expand its project- first the Russian bourgeoisie and aristocracy in 1917-18, then the kulak landowners in collectivization to assist industrialization, then the taking of industry from eastern Germany as reparations for the losses of the Great Patriotic War. After 1945 the USSR settled into a protracted frozen conflict with the West and was dragged into an arms race. The Soviets funneled arms into national liberation struggles worldwide, hoping the accumulation of allies in the Third World would tip the power balance in their favor.

Both strategies, while bold and Earth shaking, ultimately failed. The French strategy could only succeed with an uninterrupted string of military victories, which came to an end with Napoleon’s disastrous invasion of Russia in 1812. Only three years later, the Bourbon monarchs were restored to the throne in France and the vengeful conservative aristocrats of the Congress of Vienna imposed a reactionary order on all of Europe for decades.
 
The USSR was never outright conquered due to the factor of nuclear weapons, but the arms race drained much of the resources it needed for robust social spending. Neglect of the home front, especially under Brezhnev (1964-1982), proved disastrous. Economic stagnation set in, and the vanguard party became complacent, out of touch with the working class grassroots, and corrupt. This demoralized the population and enabled the rise of a capitulationist wing of the Soviet Communist Party willing to surrender to the West, which happened in 1989-1991. The Communists won in Vietnam, Angola and Cuba, only to lose in Moscow.

By contrast, both the post ‘reform and opening up’ People's Republic of China and the American Republic from the 1810’s until the 1870’s fought the rival economic order in an indirect and circuitous fashion. Both steadily built up their own independent economic base on their respective continents, while avoiding inciting or directly supporting revolutions abroad. In doing so, they provided ‘strategic depth’, a rear area if you will, of an alternative economic order. And eventually became such an economic juggernaut that direct war or conquest of their adversaries became unnecessary- the entire economic center of gravity shifted in their direction, towards America by the time of the First World War when much of Europe including Britain became indebted to Wall Street banks, and towards China in the last decade or so as the Belt and Road Initiative has taken off.

The mere existence of the United States put pressure on the 19th century European despotisms to reform, as the serfs and reform minded middle classes of Ireland, Germany and elsewhere now had the option of migrating to America, where they could themselves be landholders. Feudalism withered as the new industrial powerhouse in North America rose. China, by contrast, brings development to other countries rather than encouraging emigration to its own shores. Thus, it uplifts people from countless nationalities while not contributing to a ‘brain drain’ from the developing world that the Western imperial core has, nor facilitating polarizing culture clashes that mass immigration to the West has. But it has the same dynamic of creating mounting pressure on the old financial capitalist order- nation after nation in the Third World migrates from the debt bondage offered to them by the IMF and the World Bank to the Belt and Road Initiative which offers them a better deal.

The American System lives on, but in Eurasia. And Wall Street is now the new London, attempting to crush all developmental projects that are not indebted to them. This is the essence of the New Cold War.

The role of American and Western intellectuals in this state of affairs will be addressed in Part 3.

References

[1] Charles Halstead Van Thyne, England and America: Rivals in the American Revolution (Cambridge University Press, 1927), 33.

[2] Alexander Hamilton, ‘Report on the Subject of Manufactures’, 5 December 1791. Accessed via the National Archives:
https://founders.archives.gov/documents/Hamilton/01-10-02-0001-0007

[3] Douglas A. Irwin and Richard Sylla, Founding Choices:American Economic Policy in the 1790’s(University of Chicago Press, 2009), 100.

[4] Richard Hofstadter, The American Political Tradition and the Men Who Made It (Vintage Books, 1989 edition), 52.

[5] Henry Charles Carey, “A Harmony of Interests: Agricultural, Manufacturing and Commercial’ (New York, Myron Finch, 1856), 228-229.
Karl Marx considered Carey to be ‘the only American economist of importance’ in his era.

[6] Thomas Jefferson’s letter to Benjamin Austin, January 9, 1816. Accessed via the National Archives website:
https://founders.archives.gov/documents/Jefferson/03-09-02-0213

[7] Charles McFarland and Nevin E. Neal, “The Nascence of American Protectionism: American Tariff Policies, 1816-24”, Land Economics, Vol.45, No.1(Feb.1969): 23, University of Wisconsin Press.

[8] Maurice A. Baxter, Henry Clay and the American System(The University Press of Kentucky, 1995), 110-111.

[9] T. Arron Kotlensky, “West Point Foundry and the Great Feats of Mechanical Engineering Before the Civil War”(The American Society of Mechanical Engineers, published 2019): 3, 6: :
 https://www.asme.org/getmedia/29767c69-8e78-4c48-b5d6-e19b3cf5f668/asme-wpfp_-brochure.pdf

[10] William H. Carter, “Bvt. Maj. Gen. Simon Bernard”, Professional Memoirs, Corps of Engineers, United States Army, and Engineer Department at Large, Vol. 5, No. 21 (May-June, 1913): 312.

[11] “Report of the Committee of Investigation Appointed at the Meeting of the Stockholders of the Bank of the United States”, Philadelphia, 1841. Relevant information on funding for internal improvements is on pages 28-30 of the report:
https://fraser.stlouisfed.org/files/docs/bankunitedstates/firstsecondbank_reportboardofdirectors_18410405.pdf?utm_source=direct_download

[12] Robert V. Remni, Daniel Webster: The Man and his Time (W.W. Norton & Company,1997), 146.

[13] Hofstadter, p.89-90

[14] HW Brands, Heirs of the Founders: Henry Clay, John Calhoun and Daniel Webster(New York: Anchor Books, 2018),124-126.

[15] Hofstadter, 102

[16] Brands, 229-230.

[17] Daniel S. Shaffer, Profiting in Economic Storms (New Jersey: Wiley & Sons, 2005), 102.

[18] Emir Philips. “Lincoln’s Well Considered Political Economy(The American System) Trumped the British System”, Cambridge Journal of Economics, Volume 43, Issue 6(November 2019): 1445, Oxford University Press

[19] Philips, 1441.

[20] Perhaps because of his guilt over this, as well as his own lifelong status as a slave owner, Clay freed his female slaves in his last will and testament, made instructions for their education and apprenticeships for gainful employment, and stipulated that they should be given compensation for their labors:
https://henryclay.org/wp-content/uploads/2022/05/The-Last-Will-And-Testament-Of-Henry-Clay.pdf

[21] David A. Dieterle & Kathleen M. Simmons, Government and the Economy: An Encyclopedia (‎Holtzbrinck, 2014), 249–250.

[22] Article 1. Section 8, part 3 of the Confederate Constitution, March 11, 1861:
https://avalon.law.yale.edu/19th_century/csa_csa.asp

[23] W.E.B. Dubois, Black Reconstruction in America 1860-1880 (New York: Free Press edition, 1998), 212-213.

[24] Dubois, 585.

[25] The book in question is ‘Reunion and Reaction: The Compromise of 1877 and the End of Reconstruction’ by C. Vann Woodward(Oxford University Press, 1951).

[26] Joseph Adamczyk, “Great Railroad Strike of 1877: History, Facts, and Significance”, www.brittanica.com. Accessed July 20, 2023.
https://www.britannica.com/topic/Great-Railroad-Strike-of-1877

[27] Mao Zedong, ‘On New Democracy’, January 1940: https://www.marxists.org/reference/archive/mao/selected-works/volume-2/mswv2_26.htm

[28] Ibid.

[29] Baichun Zhang, Jiuchun Zhang, Fang Yao, “Technology Transfer from the Soviet Union to the People’s Republic of China”, Comparative Technology Transfer and Society Vol. 4. Number 2 (August 2006): 110-111, Project MUSE.                                             
http://english.ihns.cas.cn/Publications_new/Ra/201310/W020131015378079814609.pdf

[30] Zhang, Zhang, and Yao, 145-146.

[31] When the anticommunist massacres in Indonesia took place in 1965-66 (in which a million people were murdered), there was a simultaneous genocide of the ethnic Chinese population, who were suspected of pro-Communist sympathies. Some survivors fled to the Chinese mainland. Mass public meetings were held by Communist cadre where stories by these witnesses were recounted. The fact that Indonesia, which had been a bastion of progressive anti-imperialism under Sukarno, was turned into a fascist terror state seemingly overnight, held a lesson, in the eyes of Maoist idealogues: that the enemies of socialism were hiding amongst the people and the party apparatus, and had to be rooted out without mercy before they stabbed the revolution in the back. Vincent Bevins notes this vital detail in his book ‘The Jakarta Method’ (New York, Public Affairs, 2020). This may have been an important precipitating factor of the extreme zealotry that defined the Cultural Revolution.

[32] Guo Jian, Yongyi Song, and Yuan Zhou, Historical Dictionary of the Cultural Revolution (Rowan and Littlefield Publishers, 2015), 287-88.

[33] Ezra F. Vogel, Deng Xiaoping and the Transformation of China (Harvard University Press, 2011), 53.

[34] Vogel, p. 398.

[35] Deng Xiaoping, ‘We Shall Concentrate on Economic Development’, 1982.
https://www.marxists.org/reference/archive/deng-xiaoping/1982/215.htm

[36] Vogel, pages 456-461.

[37] Vogel, pages 297-310, 462-464.

[38] Stalin, Josef. ‘The Foundations of Leninism’, 1924.
https://www.marxists.org/reference/archive/stalin/works/1924/foundations-leninism/ch09.htm

[39] Shaun Breslin, “Friedrich List to a Chinese mode of
Governance”, International Affairs (Royal Institute of International Affairs 1944-) Vol. 87, No. 6 (November 2011), 1323-1343.

[40] ‘In economic policy, the two most important elders were Chen Yun and Li Xiannian’
Loren Brandt and Thomas G. Rawski, China’s Great Economic Transformation(Cambridge University Press, 2008), 102.

[41] Vogel, 718.

[42] Vogel, 721

[43] Patrick E. Tyler, “Chen Yun, Who Slowed China’s Shift to Market, Dies at 89”, New York Times, April 12, 1995: https://www.nytimes.com/1995/04/12/obituaries/chen-yun-who-slowed-china-s-shift-to-market-dies-at-89.html

[44] Li Hou. Building for Oil: Daqing and the Formation of the Chinese Socialist State (Harvard University Press, 2021), 168-201.

[45] Vogel, p. 424

[46] ‘China’s Stimulus Package: A Breakdown in Spending’. Economic Observer website, March 7, 2009,
http://www.eeo.com.cn/ens/finance_investment/2009/03/07/131626.shtml
The breakdown was 1.5 trillion yuan in public infrastructure, 1 trillion in rebuilding from the 2008 earthquake in Sichuan, 400 billion in social welfare, 370 billion in rural development.

[47] Vera Baginova, Andrey Baginov, & Dmitry Kuzmin. “High Speed Rail System in China: Best practice, state of affairs and prospects for development”.E3S Web of Conferences Volume 164(May 2020): 3.
https://www.e3s-conferences.org/articles/e3sconf/pdf/2020/24/e3sconf_tpacee2020_07013.pdf

[48] Fu-Lai Tony Yu, “Neo Mercantilist Policy and China’s Rise as a Global Power”,. Contemporary Chinese Political Economy and Strategic Relations: An International Journal, Vol. 3, No. 3, (Dec. 2017): 1053.
https://rpb115.nsysu.edu.tw/var/file/131/1131/img/2374/CCPS3(3)-Yu.pdf

[49] Chad P. Bown (PIIE), Euijin Jung (PIIE) & Eva (Yiwen) Zhang (PIIE). Peterson Institute for International Economics website, June 24, 2019. “China is Raising Tariffs on American Exports and Lowering them for Everybody Else”. https://www.piie.com/research/piie-charts/china-raising-tariffs-united-states-and-lowering-them-everybody-else

[50] Yu, 1054

[51] Bethany Allen-Ebrahimian, “Xi Jinping’s anti corruption drive had a counterintelligence motive”, Axios News, December 22 2020, https://www.axios.com/2020/12/22/xi-jinping-corruption-drive-intelligence-china

[52] Himing Fang, Jing Wu, Ronjie Zhang, & Li-An Zhou, “Understanding the Resurgence of the SOE’s in China: Evidence From the Real Estate Sector”, National Bureau of Economic Research, Working Paper No. 29688 (January 2022): 26-27. 
https://www.nber.org/system/files/working_papers/w29688/w29688.pdf

[53] Mian Sufur Rahman & Asif Mehmood Butt, “Chinese support to Pak economy will continue: Nong Rong”, The News International, January 9, 2023, https://www.thenews.com.pk/print/1028685-chinese-support-to-pak-economy-will-continue-nong-rong

[54] “China has built over 6,000 kilometers of roads in Africa”, Seetao News, February 22, 2023,
https://www.seetao.com/details/204053.html

[55] Joseph W. Sullivan, “A BRICS Currency Could Shake the US Dollars Dominance”, Foreign Policy, April 24, 2023, https://foreignpolicy.com/2023/04/24/brics-currency-end-dollar-dominance-united-states-russia-china/

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Author

Marius Trotter is a writer residing in Massachusetts. He comments on history, politics, philosophy and theory. He can be reached by his email [email protected] 

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