Policy of Peaceful Redemption

The transformation of capitalist industry and commerce through state capitalism meant that the state adopts a policy of peaceful redemption of the capitalists. In 1894, Engels wrote in “The Peasant Question in France and Germany”: We by no means consider compensation as impermissible in any event; Marx told me (and how many times!) that, in his opinion, we would get off cheapest if we could buy out the whole lot of them. After the victory of the October Revolution in Russia, Lenin also advocated compensation for "civilized capitalists" for those who accept state capitalism, and "merciless punishment" for those who would not accept state capitalism. Since the Russian bourgeoisie refused to accept state capitalism, revolted wildly, and even launched a counterrevolutionary civil war, Lenin's proposition could not be realized.

In China, after the CPC seized the state power, it confiscated bureaucratic capital and began to control the country's economic lifeline. At the same time, according to the dual nature of the national bourgeoisie and the dual role of the national capitalist economy, as well as the relationship between the proletariat and the status of the national bourgeoisie in the history of the united front, the CPC decided to adopt a policy of compensation for the means of production of the national bourgeoisie and gradually realize socialism through various forms of state capitalism.

In June 1953, the CPC Central Committee defined the peaceful acquisition of the means of production of the national bourgeoisie as a policy. In the “Resolution on the Transformation of Capitalist Industry and Commerce”, the CPC Central Committee pointed out: “For the bourgeoisie, first of all, we should use the methods of redemption and state capitalism to change the ownership of the bourgeoisie with compensation rather than without compensation, gradually rather than suddenly; second, while reforming them, we should offer them necessary work arrangements; and third is not to deprive the bourgeoisie from the right to vote, and make appropriate political arrangements for the representatives among them who actively support the socialist transformation and contribute to the cause of the transformation. Under the condition that the bourgeoisie has no other way out, this is a plan they can accept.”

The policy of redemption did not mean that the state paid extra money as a ransom to the capitalists, in fact this money was funded as in the following from the state-owned capitalist enterprises, in these state capitalist enterprises while the working class was producing mainly for the interest of the state and the people, they also partly produced profits for the capitalists. Before the industry-wide public-private joint venture system was achieved, the policy of profit distribution, i.e., dividing the profits into four parts (tax, welfare fund, accumulation fund, dividends to capitalists) was adopted. But after the industry-wide public-private joint venture system was achieved, according to a new approach the policy of compensating the capitalists by paying them fixed dividends, every year was adopted. Thus the CPC Central Committee decided that the former practice of dividing profits among four items should no longer be used. According to the new approach the state should evaluate and calculate the original value of means of production owned by the capitalists and verify the amount shares they hold, set a money amount, in order to compensate the value of their assets the capitalists would be paid 5% dividends from the profit of the enterprise as compensation for their shares, during the public-private joint venture period. In addition, capitalists who could work were properly employed as managers in the relevant state departments and they kept their higher salaries. Those who could not work were also given arrangements or relief as appropriate to protect their livelihood.

Such policy of redemption has made better use of capitalist industry and commerce and has served the national economy and people's livelihood, reduced the risk of obstruction and resistance by the bourgeoisie to socialist transformation, and was conducive to the ideological transformation of the capitalists and helped their gradual transformation into self-reliant workers.

The success in the policy of redemption of private capitalist industry and commerce in China has developed the Marxist-Leninist idea of peaceful redemption of the bourgeoisie.