List,
A Comparative Analysis of Capitalist and Socialist World Systems: A
summary of Shirley Cereseto's 1982 "Socialism, Capitalism, and
Inequality," The Insurgent Sociologist 11(2) Spring.
In her article, "Socialism, Capitalism, and Inequality," Shirley Cereseto
(1982), addresses many of the oft-heard claims about the Soviet Union and
other socialist states, claims such as "communism failed," communism was
"inefficient and stagnant," and "communism really didn't solve the
problems of inequality." In light of the evidence Cereseto provides, these
are empty claims, slogans. On a comparative basis, state socialism
represents a dramatic advance over the previous conditions that existed in
those countries and regions. State socialism surpassed most of the
capitalist world in economic growth and social justice.
Her article was published with critiques by Paul Sweezy (whose critique
was fair and constructive), Chris Dunn-Chase (who criticized her challenge
to world-system theory, but his argument did not move me), and James
Petras (whose argument was unusually bad). Cereseto's rebuttal was
excellent. But her study and her arguments were ignored after that.
Cereseto's article is a comprehensive historical-comparative analysis,
rich in statistical data on a wide-range of social and economic variables.
Thirteen socialist countries were used in the study covering one-third of
the global population. These are countries that considered themselves
socialist and were under the leadership of Marxist-Leninist parties for at
least two decades at the time of the research.
The article compares these countries with capitalist countries using four
models detailing major determinants of inequality: (1) modernization/
development theories; (2) world systems theory; (3) neo-Malthusian
theories; (4) Marxist mode of production theory. Inequality was defined as
(a) inequality of income distribution and (b) inequality of basic human
needs.
The logic of her argument is straightfoward: Marx argued that the
capitalist mode of production generates several undesirable effects: e.g.,
the concentration of wealth into the hands of fewer and fewer people,
leading to dramatic income and wealth inequality; increasing levels of
poverty, both absolute and relative; an increase in the size of surplus
labor population; and, under capitalist imperialism, a historic "solution"
to endemic crisis, subjugated regions are drained of their resources and
wealth. In her study, Cereseto finds that capital accumulation, capitalist
productive relations and the corresponding relations of distribution
clearly produce these effects. Yet, Cereseto does not find these effects
in the socialist countries she studied.
Therefore, Cereseto's research goes a long way towards settling two
long-standing and related disputes among neo-Marxists: first, that
socialist countries were/are in fact state capitalist countries. There are
many variants of this argument, but the general thrust is that, despite
state-ownership of the productive means, the state in these contexts was a
capitalist actor. Second, neo-Marxists argue that because the world system
is a capitalist world system, so-called socialist countries were/are
capitalist by virtue of their being in the same world system. Both
positions hold that capitalist laws of operation and development are, in
part, still in force. But if the laws of capitalist development are still
in force in these so-called socialist countries, then why haven't we seen
the effects that result from these laws?
Cereseto writes:
I view the new social formations as neither capitalist nor
communist, but rather as being in the early stages of the long,
arduous transition from one to the other. They are, in Marx's
terms, societies in the "first phase of communism" which
inevitably contain the defects of the societies from which they
recently emerged. They contain many other defects as well, some
of which arise from errors made while traversing the yet
uncharted, obstacle-laden path to communism. Yet, the data
presented here will clearly distinguish them from capitalist
societies with respect to the important issues of equality.
The data Cereseto employs were collected by the World Bank, the Overseas
Development Council (OCD), and other sources. A large chunk of the data
came from The World Development Report (1978), which contained a massive
cache of data concerning socialist countries, as well as data on
capitalist countries. Overall, this report covers 125 nations, or all
countries with better that 1 million population. The socialist countries
identified are: People's Republic of China, Korean People's Democratic
Republic, People's Republic of Albania, Republic of Cuba, Mongolian
People's Republic, Socialist Republic of Romania, Socialist Federal
Republic of Yugoslavia, Hungarian People's Republic, People's Republic of
Bulgaria, Union of Soviet Socialist Republics, Polish People's Republic,
Czechoslovak Socialist Republic, and German Democratic Republic.
The four models tested articulate the following propositions:
1. Modernization theorists argue that the level of economic development is
the major determinant of inequality, with inequality expected to decrease
with higher levels of economic development.
2. World systems theorists argue that it is the position of a country in
the world economy, associated with lower levels of economic development,
that determines inequality. This is because the core countries pump wealth
(in the form of surplus) out of peripheral nations. This is the mechanism
of imperialism/neoimperialism.
3. Neo-Malthusian theorists argue that overpopulation, a barrier to
development, is correlated with greater inequality. They rely on the
demographic transition to explain development.
4. Marxists view the mode of production as the crucial determinant of
inequality. Inequality is structural; it is embedded in social
arrangements internal to a social formation. And it is processual, i.e., a
product of capital accumulation. In short, it is class relational, with
unequal positions rooted in relations to structures and processes of
production.
The independent variables used in analysis are as follows: To test the
development model and compare with other models, gross national product
per capita (GNP/c) as an indicator of developmental level. Economic
growth was measured by GNP/c average annual growth for the period
1960-1976. Cereseto also used other measures to determine level of
economic development, e.g., percent of labor force in agriculture, per
capita energy consumption, and percent of population in urban areas.
To test the world systems model, she measured position in the world
economy by using (a) the percent of primary commodities in exports (an
indicator of internal division of labor) and (b) external debts as percent
of GNP (a measure of economic dependence). To test the neo-Malthusian
model, she used birth/death rates, population growth rates, total national
population, and total land density. Finally, in order to distinguish
between socialist and capitalist countries for the major comparison in
testing the Marxist model, i.e., to distinguish modes of production, she
went with self-designation and Marxist-Leninist leadership, which
correspond with the UN and World Bank practice of define socialist
countries as "centrally planned economies" and capitalist countries as
"market economies."
The dependent variables, two types, are as follows: (1) Ten physical
quality of life variables (PQLV). These were used to measure fulfillment
of basic human needs. The Physical Quality of Life Index (PQLI). The PQLI
has three components: life expectancy, infant morality, and literacy
rates. She used both the index and the component variables. She also
included several other measures of physical quality of life: calorie
supply per capita as percent of requirements, population per physician,
enrollment in secondary or higher education, female labor force as percent
of total wage labor force (employment situation), percent unemployed,
average rate of inflation (price stability). (2) Three variables were used
to measure inequality in income distribution: (a) percent of national
income received by lowest 20 percent of the population, (b) percent of
national income received by top 5 percent of the population; and the Gini
index for overall inequality (for the entire income distribution).
Cereseto devised a classification system to test her hypotheses. The ODC
ranks all countries on per capita income, then divides the countries into
four categories: high, upper-middle, lower-middle, and low income. These
similar countries, according to the ODC classification, are compared.
However, the problem with this classification scheme is that it does not
permit the comparison of capitalist and socialist countries. So Cereseto
had to divide out the socialist countries for comparison.
She came up with an ingenious scheme. She first arranged the capitalist
countries according to per capita income and then divided them into three
categories, low, middle, and high income. She then took the full range of
socialist countries on per capita income and matched these with the one
category of capitalist countries that subsumed the socialist level and
range: the middle income group. "The lower and upper cut-off points for
the middle-income capitalist category were selected so as to match the
GNP/c of the lowest and highest socialist countries. Thus, the
middle-income capitalist category and the category of socialist countries
are almost identical in per capita income range." For other comparisons
she used the full range of data, including measuring the socialist
category against both the high and the low income categories for
capitalist nations. This permitted Cereseto to test all four models and
her main proposition.
Without going into an extensive presentation of the statistical findings,
the conclusions dramatically oppose the arguments made by those advocating
the state capitalist thesis, as well as those who claim that these
countries did not achieve significant levels of social justice.
For example, we do not see what we should expect to see in
"actually-existing" socialist countries if they were state capitalist
countries. Instead, we see what we would expect to see in a socialist
transition to communism (transition as of 1978). These data also
demonstrate that the claim of "Soviet imperialism" is hollow.
Findings
The modernization/development model, tested by itself, is, in part,
supported by the data. It predicts that the higher levels of economic
development are positively correlated with better PQLV scores. The three
categories of capitalist countries are widely differentiated on PQLV
scores, PQL variables (except on female labor force participation and
inflation). However, measures of income distribution did not significantly
correlate with economic growth rates. The world system model, by itself,
also tests out fairly well. Those countries organized for export of
primary commodities have a lower level of development, lower rate of
growth, lower PQL measures, greater income inequality, and a higher rate
of population growth. And, by itself, the neo-Malthusian model tests out
quite well, also. I don't want to spend any time presenting the findings
of the neo-Malthusian model.
I wanted to present these specific findings because they show how a wide
range of theoretical models can, at least in part, explain what goes on in
capitalist countries, and this in turn explains their persistence (beyond
their ideological usefulness). But we find that they are dismally
inadequate for the task of explaining what happens in socialist countries
and in explaining the differences between socialist and capitalist
countries. Remember, modernization theories care less about whether a
country is capitalist or socialist. These are arbitrary political
distinctions for them. The real dynamic is industrialization and economic
growth (see Rostow, for example). Remember, world systems theorists deny
that socialist countries are even socialist. There is only one world
economy, they argue, and therefore every nation functions as a part of the
capitalist world system (see Wallerstein). Remember, the neo-Malthusians
believe that all other variables stem from the rate of population growth.
Socialism, capitalism, feudalism_it doesn't matter: the demographic
transition is a statistical invariant and drives development.
Now I will present Cereseto's conclusions regarding comparing modes of
production model with development model, modes of production model with
world system model, and the inequality gap.
First, comparing mode of production model_what she identifies as the
Marxist model_with the modernization/development model, she claims: "The
socialist countries are significantly higher in fulfilling basic human
needs and in income inequality despite the fact that, as a group, they
match the middle-income capitalist countries very closely on 6 of 7
measures of economic development."
Comparing socialist countries with high income countries:
While socialist countries, as a group, are at a lower level of
economic development and have a much lower income level, they are
on par with the wealthy capitalist counties on rate of economic
growth (GNP/c) and on dependent variables.... PQLI scores are
almost identical. On the other hand, the socialist countries have
higher means scores on...6 dependent variables, and 5 of the
differences are significantly better.
Comparing means scores of all capitalist and socialist nations: "On mean
per capita income, the two are almost identical. Socialist countries are
higher on all other measures of economic development.... Socialist
countries are better on every PQL variable, and significantly better on 7
of the 9."
Cereseto found that, with the exception of Yugoslavia, "which retains more
capitalistic features than any other socialist country," "the data
provided by the World Bank for 6 socialist countries places 5 of them
above all other countries in the world on income inequality." (This is a
very interesting finding regarding Yugoslavia. Yugoslavia is often held up
as a model of development, what they call "market socialism." But, just as
we would expect, because it incorporated so many capitalist mechanisms
into its economic system, it did quite poorly on matters of income
equality and quality of life.) She found that elites in capitalist
countries "take more than twice as much in income along as the top two
groups in socialist countries." On the other hand, "the lowest 20% of the
population in socialist countries receive twice as great a share of the
national income as their counterparts in capitalist countries...."
Thus, the data confirm the Marxist hypotheses that income equality
and fulfillment of basic human needs will be higher in socialist
than in capitalist countries.... [T]he development model cannot
explain why the socialist countries have much greater income
equality and much better PQL conditions than capitalist countries
at the same level of economic development. Such findings are in
opposition to the major proposition of the development model.
Second, comparing the mode of production model with the world system
model: "World system hypotheses are not supported by the data for the
socialist countries." World system theorists view the so-called socialist
countries are semi-peripheral states and regions that function to preserve
the integrity of the capitalist world system. These semi-peripheral
regions and states act as a buffer between the rich and the working class
and the poor, analogous to the function the middle class serves in the
class structure. What we should see, then, as a consequence of this
semi-peripheral position, midway between core (the rich north) and
peripheral (the poor south) regions, is socialist countries with a
mid-level of inequality, along with the other semi-peripheral nations
designated as capitalist countries. What we find, however, is that
socialist countries are the highest in the world in income equality. In
other words:
The data do support the Marxist contention that the socialist countries
constitute a separate system with different patterns of stratification.
The data further support the Marxist hypothesis that the socialist
countries will manifest less inequality than the capitalist periphery and
semi-periphery of which they were a part in the past.
What about position in the global division of labor (GDL)? How does this
pan out for the world systems theorists? As we have seen, it works well
when they are looking at capitalist countries. But when socialist
countries are thrown into the analysis (world systems theorists ignore
these countries because having to account for them makes their assertion
of a single world economy problematic), we see that primary commodities in
export lead to dramatically opposite effects. This point is crucial to
those who suppose that the relations between the Soviet Union and other
socialist countries was an imperialistic, exploitative one. Moreover, that
interstate relations differ so greatly among capitalist countries versus
socialist countries calls into question the assertion of a one world
system logic.
Whereas for capitalist countries, a high level of primary exports
(subordinate position) is significantly associated with lower urban
population, higher agricultural labor force, lower PQLI, fewer physicians,
higher death rates, lower school enrollment, greater income inequality,
and a smaller decrease in birth rates; only one of the above correlations
is significant for the socialist countries, and that one is in the
opposite direction. Higher primary commodity exports is significantly
related to lower death rates for socialist countries. It is also related,
although not significantly, to a greater decrease in birth rates, a higher
supply of physicians, and to greater income equality. In summary, for
capitalist countries a higher proportion of primary commodities in exports
(subordinate position) is significantly associated with lower economic
development, worse PQL conditions, and higher income inequality. In
contrast, for socialist countries the same measure is not associated with
any of the negative characteristics assumed to be results of subordinate
position and dependency.
Cereseto's conclusion from these finding is that degree of inequality and
fulfillment of human needs are consequences not of positions in the world
economy, but of class relations. Primary commodity export emphasis, role
in the international division of labor, position in a world economy are
not in themselves primary determinants of the internal stratification of a
country. But inequality is inherent in capitalist relations--within
nations and among nations.
If capitalist relations are overthrown and the working class assumes
power, then it is potentially in a position to alter the nature of its
production, its production relations, stratification, and relations with
other states_in a more egalitarian direction. This is, in fact, what
occurred in the countries which became socialist societies. To reiterate
an earlier point, this is a strong refutation of the state capitalist
thesis, and strong enough evidence to claim that these countries were, in
fact, socialist.
Finally, the inequality gap. First, as expected, the gap between rich and
poor has continued to increase in capitalist countries. What about for
socialist countries? The Marxist model predicts that under socialism the
inequality gap will narrow. Prior to WWII, those countries that would
become socialist were distributed in the full range of the underdeveloped
world (this is the entire world except for 14 developed countries). Three
of the Asian countries that would become socialist were the poorest in the
world.
At the time of Cereseto's research no socialist country was in the bottom
category. Every single one of them was in the middle-income range. In
fact, 41 countries, covering 34% of the world's population, had per capita
incomes below the poorest socialist nation. Cereseto found that for
capitalist countries, when examining the correlation coefficient of GNP/c
with GNP/c growth rate, that "there is a significant positive relationship
....that wealth is correlated with faster economic growth rate. Whereas,
the relationship is insignificant and slightly negative for socialist
countries."
For socialist countries which belong to the Council for Mutual Economic
Assistant (CMEA), this represents a deliberate policy of planning to
narrow the gap. For socialist countries in general, however, whether or
not they are members of CMEA, the data support the claim that there are no
systematic, exploitative, economic mechanisms operating among socialist
countries designed to maintain positions of economic dominance and
subordination.
"In terms of meeting basic human needs and income inequality which are
primary concerns of the paper," she continues, "the data are even more
striking."
The dispersion on the Gini Index of income inequality between
capitalist countries is almost 2 times as great as the difference
in the range between socialist countries. PQLI scores within the
capitalist world system range from an incredible score of 14 to
100, whereas for the socialist countries the range is quite small,
from 76 to 96. The disparity within the capitalist world system on
each of the PQLI components is enormous.... The range of score for
the socialist countries, by comparison is very narrow... [A]t the
present time, life expectancy, literacy, and infant mortality
rates for all socialist countries are substantially better than
the mean scores of the capitalist countries.
Ironically, Cereseto points out that the goals specified in Reshaping the
International Order: A Report to the Club of Rome, by the Tinbergen Group
in 1976 (a study group formed by the elite capitalist organ the Club of
Rome), have been surpassed by all the socialist countries, whereas only
the high income groups among capitalist nations have met the Tinbergen
goals.
To conclude, I am going to quote extended extracts from the summary and
implication section of Cereseto's paper. In contrast to the other models
discussed in her paper, the data
appear to be more adequately explained by the Marxist proposition
that each social system has its own set of laws. The law of
capitalist accumulation, with its priority on private profit
maximization, inevitably leads to uneven development, to growing
concentration of wealth at one end of the pole and poverty at the
other end. The difference material conditions of life them, in
turn, produce different rates of population growth. In a socialist
society, with the means of production publicly owned, with the
imperative of private profit maximization eliminated, production
can theoretically be planned to meet basic human needs of the
entire population. With improvement in economic conditions, in
security, in public health and educational services, in
opportunities for employment of women, population growth would
decrease. These assumptions and propositions appear to be
supported by the data examined in this study.
The main value of this study and the major implications stem from
the findings which support Marx's proposition that social
relationships are governed by laws which are distinctive and
specific to each social system. Research which studies only
capitalist societies or which includes socialist countries
intermingled and not distinguished as a separate system
contributes to the belief that the relationships found in these
many studies are universal and inevitable processes.... The data
in this study contradict such assumptions. The evidence
demonstrates that socialist countries, with planning geared toward
meetings the basic human needs of the entire population and toward
decreasing inequality have made important strides toward such
goals in a relatively short period of time even through most began
at a very low stage of economic development.
Andy