The surplus passing from the peasantry into the hands of three groups of capitalists (state, "village" and overseas) was still massive despite the reforms, while low peasant incomes meant a ready supply of workers for the new industries, which did not even have to provide the guaranteed minimum living standards and social protection (the so-called "iron rice bowl") of the old state-run heavy industries. In effect, there was a new model of capitalist accumulation, combining the high level of exploitation and repression of the old state capitalism with a turn towards catering for markets-and the markets came increasingly from exporting to the rest of the world system, while providing for the increasingly conspicuous consumption of the old state bureaucracy on the one hand and its children as they took over privatised industries on the other.
The new hybrid economy had contradictions of its own, with the ups and downs of market capitalism superimposed on the ups and downs of the old state capitalist accumulation model. There were wild fluctuations in growth rates. The scale on which the new industries competed with each other for resources created shortages and forced prices up, until the state tried to impose some order on the market by curtailing funds for further investment. So the growth rate could be above 20 percent in 1984, down to around 3 percent in 1985 and back up to close to 20 percent in 1988. There then followed a major economic, social and political crisis in 1989 as growth fell right back and prices soared. This was the economic background to tumultuous student and worker demonstrations in 1989 in most of the major cities, most famously in Tiananmen Square in Beijing.
The regime found a way out of the crisis from 1992 onwards almost by accident. Unable to control things itself, it placed its hopes on unleashing a new round of accumulation based on uncontrolled competition between different industrial concerns. Those who ran village governments were able to turn the new industries into their private property and link up with foreign capital, as were the managers of the great state-owned enterprises. There was a massive rationalisation of old industries, with perhaps 30 million workers losing their jobs. These measures were acclaimed as "progressive" by pro-capitalist economists right across the world. What they meant for workers was portrayed graphically in the 2003 Chinese film Blind Shaft, in which the degrading conditions under which the miners work lead two of them to murder a co-worker in an attempt to blackmail corrupt managers. The closeness of reality to the fiction was shown in a mining disaster in Guangdong (supposedly China's most "advanced" province) in the summer of 2005. As more than 100 miners suffocated underground, the owner fled when it was revealed he had paid out millions of dollars in bribes to take over the previously shut down state-owned mine, and at the same time to buy himself a senior position in the local police force. In this way he had been able to ignore all safety precautions while parading himself as an exemplary "entrepreneur" for his role in supplying coal to satisfy the energy needs of a booming economy. 37
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The New Age of Global Instability