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Somewhere between 1940-1950, the SYSTEM THEORY developed under Stalins 1patronage in the Soviet Union that was

later exported to China after some modification. In early 1950, socialism found its way to China in the form of Soviets system theory which was part of the superstructure of Soviet economic and political assistance. The system theory was presented as the Marxist theory on the political economy of socialism and was explained by Soviet manuals on political economy in Political Economy; A Textbook published in 19542. The system theory was the first attempt by the classical writings of Marxism to present socialist political economy as a rational entity and a scientific system. Under system theory, social development is determined by two (2) different categories of objective laws which are firstly, the general law where it operates through all known modes of production. The other one is via the specific law. Under this specific law, it specify to one or some but does not necessarily in all modes of production. This impliedly demonstrate socialism as an independent and relatively stable social formation with its own set of objective law. At the heart of socialism, there is a fundamental law of socialism which establishes that socialist production produces not for profit, yet to satisfy the material and cultural needs of the working people in the process of constructing socialism. Around this fundamental law, there are also a non fundamental law which are secondary to the fundamental law where it functioned as to fulfill its demands. Example of the non fundamental law is the law of value which assures that the product are exchanged at equal value. In system theory, it states that the law of value still have its influence under socialism yet it operates in a purified form where it is controlled by public ownership and socialist planning and as such, having only a regulatory function. Even though socialism is considered as an independent social formation, there still exist categories such as money, commodities and values however it is claimed that they too exist in a purified form which are free from capitalist element. So, according to the system theory, as long as these laws are understood and applied precisely, socialist production will be able to develop smoothly. Around middle of 1960, Mao Zedong developed a theory known as GENERATIVE CLASS THEORY. Generative class theory is theory on the growth of new classes within socialist society with socialist economy as the material foundation. Basically, generative class theory

Joseph Vissarionovich Stalin (18 December 1878 5 March 1953) was the Premier of the Soviet Union from 6 May 1941 to 5 March 1953. Danish ed .. Copenhagen 1955.

come into picture as a result of complex development through three (3) phases. The first phase if before 1958, where Mao asserts that class struggle continues in socialist society even after the transformation of the ownership system and revolutionizing production relations is a necessary pre condition in promoting the economic growth. He then revived the concept of revisionism which was excluded from the system theory and identify revisionism as bourgeois tendency within the communist party that have its roots in socialist itself. In the second phase between 1958 and 1961, Mao broke away from the idea that socialism was an independent mode of production. He found that socialism to be in a transitional social form i.e. a society on its way between capitalism and communism. He found that socialism is dominated by contradictions between economic base and superstructure, between forces and production relations and within production relation themselves. Therefore, he still considered social and class contradictions to be motivating factor in social and economic development. Mao acknowledge the existence of objective laws but he stressed that, there are only man made law and therefore, one cannot allow oneself to become a slave for them. He stated that the major development in productive force always come after changes in production relations. The process of revolutionizing production relations is a process of simultaneously changing all three (3) aspects of these relations; the ownership system, mutual relations within production and system of redistribution of social conduct. The direction of the process is from private to collective to state ownership and finally to ownership by the whole people. By stressing the need for simultaneous revolutionizing of all three aspect of production relation, Mao discarded the evolutionary and mechanistic beliefs inherent in the system theory and stressed the revolutionary potential of socialism instead. On the third phase, after the year of 1961, Mao focused on China internal problem i.e. on the nature of class struggle and this, finally led to him to formulate generative class theory around 1964 and 1965. He pointed out that in 1950, bourgeoisie still exist and the contradiction between proletariat and bourgeoisie still continued to exist during the system theory and during this class struggle, there exist a new bourgeoisie; the vested interest group. He argued that there are vested interest group in socialist society trying at each other new phase of social development to exert their influence to consolidate development and prevent further changes in order to protect their own vested interests and privileges. In early 1962, Mao argued that in socialist society, the working class is confronted with new bourgeoisie element generated within the given

social framework and that; these are also to be found within the Communist Party. By August 1962, he stated that class struggle most importantly, was aimed at new non socialist forces, i.e. new bourgeoisie element and people walking the capitalist road. On December 1964, Mao didnt want to admit the existence of new class of society in China (the new bourgeoisie) and he want to focus on the people in power within the communist party. However, later it was found that people in power within the communist party, walking along the capitalist road. Thus, he then formulated the generative class theory. By identifying the communist party as the nodal point in the overall social process whereby the new bourgeoisie is generated, and by pointing out the need for continued class struggle, Mao not only presented as a new conception of socialist society, yet he also provide the guideline for future political struggle in China. Maos generative class theory had cause cultural revolution where he design cultural revolution to reinforce socialism in China by removing capitalist in China (the bourgeoisie). He thought that a greater threat to China came from the people within the communist party i.e. the people in power within the communist party who walks along the capitalist road (capitalist from within). He is in the view that a renewal or revolution of culture is needed to get rid of those people who had capitalist mind. Therefore, during the culture revolution, a group of people know as red guard was formed and they struggle against authority at all levels of society. They simply raided the house, arrest and punish people without reasons, rape women to humiliate them and more. There is no legal procedure at all during that time where justice is theoratical only. Court was closed and all legal personnel were sent to countryside to be rehabilitated and do all the hard labour. The cultural revolution had led to the destruction of Chinas traditional heritage and creating general economic and social chaos in the country. Soon after the death of Mao Zedong, the cultural revolution ended and Gang of Four led by Maos wife was prosecuted for what had happened in China during the revolution. After that, China went back to socialist legality led under Dengs reformation. After Maos death, Deng had become the leader of China and his idea of reforms is known as Socialism with Chinese Characteristic where it consists of a mixture of socialist planning with a market economy, known as MARKET SOCIALISM. Market socialism is economy in which firms are owned and controlled by the government but then, they may sell their products to

consumer in competetive market. The idea of market socialism is to democratize units of production, making sure that no private monopolies exist while using the efficiencies of the marketplace. Basically, individual are allowed to benefit from their effort even though they are subjected to govenment control. The aim of market socialism by Deng is to transform China from a sluggish poorly planned economy into a market economy capable of generating strong economis growthin increasing the well being of Chinese citizen. However, in doing so, he remained committed to centralized control and the one-party state. Following its implementation, this economic system has supplemented the centrally planned economy in the People's Republic of China, and the high growth rates in GDP during the past decades have been attributed to it. Within this model, privately owned enterprises are a major component of the economic system, along with the central state-owned enterprises and collective / township village enterprises.