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Foreign corporations on the scaffold in China
Howard Richman, 5/5/2015

Vladimir Lenin reportedly said, "The capitalists will sell us the rope with which we will hang them." The Washington Post reported on April 24 (The Great Unraveling of Globalization) that American corporations are now on the scaffold in China:

[I]n February, China levied a record $975 million fine against U.S. chipmaker Qualcomm for violating the country’s antimonopoly regulations by offering tiered prices for technology licenses based on volume, a common practice in global industries. This penalty will cut Qualcomm’s 2015 earnings by as much as 58 cents a share, or 15 percent of its profits.

In the past year, as many as 30 multinationals were placed under investigation — some were penalized and others raided — by Chinese government authorities for any number of dubious infractions. Among those in the crosshairs: drugmaker GlaxoSmithKline (corruption), Apple (inadequate warranties), Microsoft (monopolistic practices), and Audi, BMW and Daimler-Benz (price gouging). No surprise, then, that more than half of multinationals responding to a survey by the American Chamber of Commerce in China said that Chinese regulators “targeted” foreign firms and that laws and regulations favored domestic companies

We put this in context on pages 78 and 79 of our 2008 book, Trading Away Our Future:

When Lenin in 1921 approved the New Economic Policy (NEP) that gave profit incentives to farmers and small private enterprises, he explained to his supporters that this capitalist-like policy was a necessary precondition to building communism. As a result of introducing some free-market incentives, agricultural and industrial production had been restored to its prewar levels by 1928. Stalin’s abrupt abandonment of Lenin’s New Economic Policy led tragically and inevitably to the relative stagnation and ultimate failure of the Soviet Union.

What gives us pause is that the Communist Party’s leaders may consider free markets as a tactic. Marxists believe that all economies have to go through a capitalist stage. Once the development of that stage reaches the “right” level, the dictatorship of the proletariat can be imposed.

In December 2006, William F. Jasper discussed the striking parallels between Lenin’s NEP and what the Chinese leadership calls “market socialism.” He pointed out that journalists and professors were quick to call the Soviet Union of Lenin’s time a “former” communist country. He pointed out that capitalists (Armand Hammer, Averell Harriman, and Henry Ford) rushed in to invest in the new Soviet Union. He also pointed out that communists today, including members of the CCP leadership, specifically compare “market socialism” to Lenin’s NEP. According to Jasper, here is how Lenin summed up the strategy behind the NEP when explaining it to his fellow communists:

The Capitalists of the world and their governments, in pursuit of conquest of the Soviet market, will close their eyes to the indicated higher reality and thus will turn into deaf mute blind men. They will extend credits, which will strengthen for us the Communist Party in their countries, and giving us the materials and technology we lack, they will restore our military industry, indispensable for our future victorious attacks on our suppliers. In other words, they will labor for the preparation for their own suicide.

Have these corporations learned their lesson about Communism? The answer is a resounding "No!" They can't wait to build factories in Vietnam, from which they plan to export goods duty free to the United States under the protection of the Trans Pacific Partnership.

Perhaps if the Ivy League colleges had taught future corporate managers about Lenin's New Economic Plan, they would not have been so easily fooled. They are on the scaffold now. The hanging comes later.

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

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  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

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