Tuesday, May 06, 2014


From China (6 May - sorry, I lost the links!; 7 May: Found them!: HERE 
Zhang Weiwei, director of the Center for China Development Model Research at Fudan University and a senior research fellow at the Shanghai Chunqiu Institute for Developmental and Strategic Studies, is the author of "The China Wave: Rise of A Civilizational State" (World Century Publishing Corporation, 2012). This article was distributed by the Guancha Syndicate and its Chinese original was published in guancha.cn.
Market fundamentalists believe the market's "invisible hand" could solve all the economic and even social problems. Not only do true believers pay no attention to their numerous failed experiments in non-western societies -- from "structural adjustments" in Africa to "shock therapy" in Russia, but their blind faith has also led to the financial crisis in their own backyard today.
In the past few decades, China, on the other hand, has adopted the "socialist market economy" in which the government's "visible hand" and the market's "invisible hand" are combined. While this model is far from perfect and needs further fine-tuning, it seems to bring together the best of two possible worlds and has achieved stunning results for China.”
There are several countries calling themselves “democracies”, or variations of “people’s democracies”, that are barely concealed tyrannies and very unpleasant places to live in, other than for a few weeks as a pampered tourist. They are also regularly self-exposed as highly corrupt among their ruling elites and where their punishments are often carried out without the benefit of respect for justice based on individual liberty.
That China has opened up its economy is a welcome development and its early results are encouraging.  To what extent the grafting of the two systems of rule will remain stable is still an open question.
A Polish Marxist economist , Professor Oscar Lange, wrote books on “socialist economics’ that integrated neoclassical pricing with state management in the 1930—40s.  His attempts to demonstrate their superiority to commercial markets failed from Soviet inspired Stalinism that went for outright state control with no markets. Mao copied the Stalin model without the so-called “invisible hand” model melded with the “visible” dictatorship of State planning abysmally failed.  That model failed in the Soviet Union and in its Maoist version in China.
Mao’s heirs eventually tried another version, loosely shaddowing Lange’s thought experiment: outright large-scale capitalist ventures allowed in China along-side state macro-planning.  The successes of the imported capitalist ventures and the continuing indebtedness of the old state-planning ventures managed by Chinese communist state-secrecy is an unstable relationship, both economically and politically.  

In the absence of democratic structures, the necessary tensions within the upper elite will express themselves in cracks in their monolithic unity, under which the top elite keeps the lid on any public dissent.  Elite personnel changes may signify further shifts in due course, or - horrors - a return to Stalin/Maoist central planning. 
Wholesale adoption of markets (there is no "invisible hand"!) as an outside option domostrated by very VISIBLE prices and a Chinese version of the justice and individual liberty is always an option.


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