PAUL SOLMAN: Mao Zedong. In spirit, master of all he surveys right here in the heart of Beijing. Twenty-nine years after his death, the great helmsman is here in body as well, preserved inside a mausoleum. But after a few weeks in China, we couldn't help but wonder: How does the totalitarian communist icon fit with the capitalist wealth-fest that the People's Republic of China has become? We went looking for answers, though not in the usual places. The Red Capital Club, with a vintage party limo parked out front, is a recreation of a 1950s Communist Party haunt.
LAURENCE BRAHM: This is the lounge, and we're sitting on the old politburo seats.
PAUL SOLMAN: This is the actual seats -
LAURENCE BRAHM: The actual seats the leadership used to sit on.
PAUL SOLMAN: Laurence Brahm runs this place. It features a fallout shelter built to withstand a Soviet attack against red China, though, from the looks of it, it wouldn't have lasted a Moscow minute. Brahm also hawks red Chinese tchotchkes featuring Mao and company, better known as mass murderers in the West.
LAURENCE BRAHM: This is a reproduction of Mao's car. It becomes a fashion statement. It becomes a kind of piece of art. Some call it commie chic.
PAUL SOLMAN: Commie chic.
LAURENCE BRAHM: Commie chic.
PAUL SOLMAN: Brahm came to China in 1981 as a leftist idealist, has become an entrepreneur, author, filmmaker and, critics charge, a lackey of the Communist Party.
LAURENCE BRAHM: A whole new generation of young people are actually going out and buying things like this, and all the artists and high- tech kids are going around with, you know, "serve the people" bags, which you would have only seen in the Cultural Revolution because they're looking for kind of a psychology, an ideology in an era when western materialism seems to have flooded China, and seems to be threatening their own cultural roots.
PAUL SOLMAN: You could argue that peddling Mao is that materialism. Brahm would counter that he's resurrecting China's roots, which means it's time for a bit of history.
After the last emperor was deposed in 1912, chaos reigned in China. In 1921, with Karl Marx looking on, the Chinese Communist Party was founded. That's young Mao standing on the left. From a prosperous peasant family, he became the party's head. After decades of civil war and invasion by Japan, the communists under Mao prevailed. The opposition nationalists fell and barely managed to retreat offshore to Taiwan. Over the mainland, a red flag flew. A painting in the club's inner sanctum marks red China's triumph. However, says Brahm --
LAURENCE BRAHM: That experiment failed for a number of reasons. But now we're in a new era, and that new era represents in a way the revival of that hope and that spirit.
PAUL SOLMAN: Brahm claims the enthusiasm of '50s communism that propelled, for example, the Great Leap Forward and was celebrated in propaganda films like this one, lives on in China's new market economy.
Of course, that ignores Mao's mismanagement of the economy that resulted in mass famines, killing an estimated 20 million; ignores the mass brutality of the Cultural Revolution depicted by another set of figurines we came upon one day in a dark shop; children denouncing parents; students abusing teachers; a world purposely turned upside down. With suicides and executions throughout the land, the best and brightest were driven from classrooms to plough with the peasantry.
One of the survivors is Liu Chuanzhi, legendary head of the Chinese firm that recently bought IBM's personal computer business to compete on a global scale. He blames the revolution for paralyzing budding entrepreneurs like him for decades.
LIU CHUANZHI, Chairman, Lenovo (Translated): I was sent to a farm on an island to work as a laborer. While I worked as a laborer, my heart was heavy, depressed, even angry. With regard to freedom of speech, just conversing with an American was cause for treason. I still truly loathe the individuals who initiated the Cultural Revolution. Never did I think at that time that China would make the types of earth-shattering changes that we have seen.
PAUL SOLMAN: Earth-shattering, indeed. China's official doctrine is still communism, but in reality --
LAURENCE BRAHM: It's a completely free market economy, very little government interference in the operation of the economy, and total materialist values which have taken over the country. So it's gone from one extreme to the other.
PAUL SOLMAN: That's probably overstating the case, but the pendulum certainly did begin to swing in 1978 when Mao's successor, Deng Xiaoping, famously said that "to get rich is glorious." Shanghai ad man Tom Doctoroff says the quote is often misinterpreted.
TOM DOCTOROFF: What he was basically saying was not that you have a right to get rich; he was saying that, as a Chinese person, you have an obligation to generate capital for the benefit of the motherland and for a great and glorious China. So, not only is cash not bad, it's good because it is Deng Xiaoping-approved endorsement. It's the definition of success here because you're contributing to something bigger than yourself, which is the nation.
PAUL SOLMAN: But isn't that sort of a con job?
TOM DOCTOROFF: Well, you're not going to get political correctness out of me. It's incredibly artful propaganda. Let's put it like that.
PAUL SOLMAN: Propaganda that tries to reconcile the idealism of old with the materialism of today. But the values of materialism are hard to resist. China adopted a strict one-child policy in 1979, but you can now subvert it and buy the right to a second kid.
LAURENCE BRAHM: It's about $12,000 U.S. to be able to obtain your second Social Security number here.
PAUL SOLMAN: Is that in line with your values?
LAURENCE BRAHM: If you're going to come here, take your values and throw them out because this is a place where you have to come with a very open mind.
PAUL SOLMAN: A suggestion many Chinese with their long tradition of values might well find offensive. But regardless of how open your mind should be here, it certainly helps to have an open wallet, filled with images of Mao Zedong; on every denomination of Chinese money it's Mao and Mao only.
PROFESSOR CHUN CHANG: Chinese have very mixed feelings about Mao.
PAUL SOLMAN: After years in the U.S., Professor Chun Chang recently returned to teach finance in Shanghai.
PROFESSOR CHUN CHANG: Most Chinese think he did terrible things during the Cultural Revolution, but still they view him as a national hero because he was the first one who stood up after maybe one hundred or two hundred years of humiliation by foreign powers. Because of this, people even can forget about those millions of people's deaths.
PAUL SOLMAN: Of course, it could be dangerous to bad mouth Mao in China. At MIT, though, Yasheng Huang, brought up in Beijing, agrees that Mao is an icon.
YASHENG HUANG: But I think that the ultimate reason why he remains today as an icon, as you put it, is for political reasons. He, of all the Chinese leaders, provided the political legitimacy for the current communist regime, even though his specific policies have been reversed, have been given up. But in terms of the ideological legitimacy, that still came largely from him.
PAUL SOLMAN: So the regime capitalizes on the victor over the invaders, the re-unifier, the man whose party, though not his policies, brought back China's prosperity and prestige. And so, in Beijing's Central Park, they copy Mao's poetry. Bitter irony to us foreigners, perhaps-- state-sponsored, state-enforced denial-- but a powerful image to many here, it would seem and for some, not a bad way to make a buck.