Saturday, December 08, 2007

The China syndrome...

In cruising around the various "news" berths that I check on a regular basis I dropped in on the mates at aldaily.

Among the more recent offerings is this from Slavoj Zizek, a quite interesting essay on the history and future of the "China Capitalism". He presents an interesting view of the history of China's economy, rationalising the command economy with the Europe of the early Industrial Revolution, the birth of the economics of Marx and Engels, and the rationale behind the Cultural Revolution.
Modern-day China is not an oriental-despotic distortion of capitalism, but rather the repetition of capitalism’s development in Europe itself. In the early modern era, most European states were far from democratic. And if they were democratic (as was the case of the Netherlands during the 17th century), it was only a democracy of the propertied liberal elite, not of the workers. Conditions for capitalism were created and sustained by a brutal state dictatorship, very much like today’s China. The state legalized violent expropriations of the common people, which turned them proletarian. The state then disciplined them, teaching them to conform to their new ancilliary role.

The features we identify today with liberal democracy and freedom (trade unions, universal vote, freedom of the press, etc.) are far from natural fruits of capitalism. The lower classes won them by waging long, difficult struggles throughout the 19th century. Recall the list of demands that Karl Marx and Friedrich Engels made in the conclusion of The Communist Manifesto. With the exception of the abolition of private property, most of them—such as a progressive income tax, free public education and abolishing child labor—are today widely accepted in “bourgeois” democracies, and all were gained as the result of popular struggles.

I might add to that the final stages of that popular revolution, one often overlooked, and not (to my knowledge) one promoted by the MArx/Engels collective. It was a revolution that first started to fruit in New Zealand, although the flowers had bloomed in Britain long before. That revolution was, of course, the emancipation of women; the granting of full participatory rights to a good half of the population that had previously been ignored.

However, it is the Chinese economy that has centre stage here.

It was primarily this statement that pricked my fancy -
Those who see this [the revival of the Marxist ideal] as a threat to capitalist liberalization totally miss the point.

As do most, if not all of those who have commented (one at considerable length) poking the borax at Zizek for "getting it all totally wrong".

As Zizek concludes -
That is what is so unsettling about today’s China: Its authoritarian capitalism may not be merely a remainder of our past but a portent of our future.

He is not alone. Businessweek has similar thoughts -

Without question, China's business class has come a long way since the Deng era. Although the hybrid firms were a big break from socialism, authorities were more willing to shower favors like cheap loans and land on companies in which the state had a stake. That largesse often prevented companies from becoming truly competitive--and fed enormous waste.

Government-owned companies that all but monopolized business a decade ago make up only 47% of the economy today. Meanwhile, the private sector--not counting farms and the operations of foreign investors--accounts for as much as 40%, according to the China Economic Quarterly, an independent journal. In Shanghai, the number of private enterprises exceeds 111,000, according to the Shanghai Private Enterprise Assn.

If those numbers are accurate, then the private sector is making enormous strides--especially since government companies still monopolize such key industries as banking, telecom services, and wholesaling. One factor boosting these numbers is that many companies have ceased to disguise their truly private nature. Until recently, many ''foreign joint ventures'' were controlled by domestic entrepreneurs through Hong Kong shells. Other entrepreneurs felt they had to register their companies as collectives just so local clients would do business with them. ''Now I have thrown away my 'red cap,''' says Zhou Fusheng, founder of $1.2 million signmaker Shanghai Dasheng Industry & Trade Co., who termed his company a ''collective'' in its early years. ''I'm not afraid to be a private businessman anymore.'' Also, a wave of privatizations by cash-hungry provincial and municipal governments has placed thousands of factories and service companies in private hands.

BEST HOPE. The implications for China, where the claim that the state is the core of the economy remains embedded in Communist Party dogma, are earthshaking. Not only does raw capitalism raise new questions about the legitimacy of the party's monopoly--it also underscores the desperation the leadership now faces over the economy. Simply put, President Jiang Zemin, Premier Zhu Rongji, and others recognize that the private sector offers the best hope as an engine of growth. As state firms shed workers and shut plants, new businesses are urgently needed to generate millions of new jobs.

and later -
In many advanced economies, social tensions find some release in democratic elections that allow the aggrieved to oust unpopular or corrupt leaders. China has so far steadfastly avoided that approach. It is instead struggling to find other ways to keep its vast bureaucracy and increasingly unruly businesses in line.

Few people think these trends pose an imminent threat to the Communist Party's hold on power. ... More immediately, there are economic costs that result from the disjunctures, and these could imperil the continued progress of China's economic reforms.

Concluding that -
China's leaders in the past three decades have engineered one of the most remarkable economic transformations in human history. And yet today the country faces tests borne of that progress that are in some ways trickier than those it has already overcome. A nation that started out railing against capitalism now embodies many of its most extreme elements. Like other industrializing economies, it must find ways to guide national ambitions, so they don't ultimately undercut the national interest.

The strength of the China economic miracle lies with the strength of its leadership. Is that something unique?

Hardly -
PRESIDENT George W. Bush has rolled out multiple measures aimed at preventing borrowers with sub-prime adjustable-rate mortgages from entering foreclosure, but he also blasted Congress for not doing more to help.

"There is no perfect solution," he said. "The home owners deserve our help. The steps I've outlined today are a sensible response to a serious challenge."
Speaking at the White House, Mr Bush said a rise in foreclosures would have a "negative" impact on the economy.

"Yet one reason for confidence is that the downturn in housing comes against the backdrop of solid fundamentals in other areas, including low inflation, a healthy job market, record-high exports," he said. But with close to 2 million sub-prime ARMs scheduled to reset higher by the end of 2009, Mr Bush said initiatives were needed to address such a broad potential problem.
Other legislative initiatives included expanding the ability of state and local governments to issue tax-exempt bonds to help borrowers refinance.

And he called on the Senate to pass legislation to reform oversight of government-sponsored enterprises Fannie Mae and Freddie Mac.

He said legislation passed earlier this year by the House to reform supervision of the companies was a "good start".

"These institutions provide liquidity in the mortgage market that benefits millions of home owners, and it is vital that they operate safely and operate soundly," Mr Bush said.

... and so on.

The connection? Well I obviously do not believe that Bush has power of directive over the remainder of the US government. That is simply not so. But there is a strong political voice, and one which is entirely capable of turning to a majority opposition and saying -

"Well, we suggested the solution, you ignored it, so the responsibility is yours. Not that you care..."

No comments: