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A contest between two capitalisms
Robert Reich
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TEXT OF COMMENTARY
Scott Jagow: President Bush arrives in China tomorrow. The next day, he'll attend the Olympic opening ceremonies. And the unveiling of a new American embassy in Beijing. The relationship between China and the U.S. is constantly evolving.
Robert Reich: The real competition lurking behind the upcoming Olympic games is between democratic capitalism and authoritarian capitalism. For years, American policy toward China assumed that trade and economic growth would generate a large Chinese middle class, and this middle class would demand democratic reforms.
We were right on the first part. The games will showcase a Chinese middle class so big that almost as many Chinese now use cell phones and the Internet as do Americans, and soon as many will own cars. But we were wrong about the democracy part. We thought capitalism and democracy went hand in glove. They don't.
Economic reforms are well underway. Chinese can own property and invest, trade what they wish and buy what they want. Private enterprise is in, collectives are out. But when it comes to civil and political rights, China today is where it was almost two decades ago at the time of Tiananmen Square.
Authoritarian capitalism works wonders if all you care about is getting ahead economically and being able to afford more stuff. Never before in history have so many people gained economic ground so fast as in China over the last two decades. But if you're someone with a grievance, or you want to criticize those in power, or you're a Tibetan or ethnic minority, or you happen to like clean air, you're out of luck.
Democratic capitalism should win in the end because it responds far better to what people want -- not only as consumers but also as citizens. Yet right now it's not so clear. The Chinese economy is booming while we're in deep trouble. Eighty percent of Chinese are optimistic about the future but only 20 percent of Americans say this nation is on the right track.
In terms of this big contest, you might think of our upcoming presidential election as our own Olympic games. It will showcase to the world how well democratic capitalism still works.
Jagow: Robert Reich teaches public policy at the University of California, Berkeley.
Robert Reich is a good writer, for sure. But I really wish he'd get off this "democratic capitalism" baloney.
Over 400 years of history both here and in Europe shows that the struggle for democracy and liberty has been literally a struggle against capitalism of every variety. In fact, democracy forms the economic cornerstone of socialism, and it is socialist-inspired reforms to capitalist economics that have given us the celebrated, yet still all too limited, democracy we have now.
http://www.marxists.org/archive/cannon/works/1957/socialism.htm
http://www.marxists.org/archive/foot-paul/1997/04/socdem.htm
Capitalism is based on an economic rule called Master-Servant Law and similar coercive and usurping legal structures, which is also the basis of every dictatorship (regardless of what it calls itself) in modern history.
http://en.wikipedia.org/wiki/Master_and_Servant_Act
http://findarticles.com/p/articles/mi_qa3686/is_200512/ai_n16350407
And the very struggle for democracy, led historically by labour and cooperative movements, has been a fight against this and similar laws on which capitalism is based.
http://www.ndol.org/ndol_ci.cfm?kaid=450004&subid=900021&contentid=251921
As for China, former Soviet Union, etc., the authoritarian capitalism label that Reich uses is in fact nothing new. While the corporate media and politicians across the globe have bombarded us with all BS about “communism†etc., the truth is, right from the leaders and architects of the Soviet and Chinese economic models, those are/were in fact expressions of “transitional†capitalism under a central state plan with a high degree of direct state ownership of capitalistic corporations and businesses.
Read Lenin’s post-revolutionary framework, State Capitalism during the Transition to Socialism.
[URL=http://www.blackwell-synergy.com/doi/abs/10.1111/1468-232X.00302?journal... Industrial Management under a State Capitalist Monopoly Framework [/URL]
[URL=http://tinyurl.com/2hwvh9]Progress Publishers, Moscow; Lenin: State Capitalism during the Transition to Socialism (Index) [/URL]
Of course, the “transitional†part ended with Stalin’s 1929 coup, where this centralized state capitalist was to be used to create a 20th century version of a new Imperial Russia.
After the Maoist victory in China, a similar model was developed.
[URL=http://www.marxists.org/reference/archive/mao/selected-works/volume-5/ms... State capitalism on Building the Economy-- Conference on Financial and Economic Framework 1953[/URL]
What’s changed now is that China is moving away from the rigid economic nationalism of the Mao era toward globalization. That’s why we don’t hear much whining from the usual extreme right-wing corporate capitalist think tanks of failed economics, like Milton Freidman, American enterprise Institute, etc., about China since this started to happen.
Obviously, there’s a common bond between authoritarian state-directed or owned capitalism of the Stalin-Mao variety and the more traditional elite private sector corporate bureaucracy-driven capitalism of the US, British Empire, colonialism, etc., with the state acting as a service agency to their agendas.
The good news is there is a recent wave of center-left electoral victories, winning on economic democracy platforms, growing global warming concerns renewing interest in sustainability instead of profit maximization and an overall global rise in labour union membership and militancy (except here of course).
This should motivate all those of conscience to look into democratic business models (co-op, employee ownership, union-sponsored ventures, CED, etc.) and finally doing away with the oppressive corporate capitalist/employer-employee/divine right of kings models that have held us back for so long.
During my most recent business stays in China, I saw over a dozen different manufacturing firms of different sizes, and I saw a ruthlessly competitive capitalist system at work. However, the capitalist greed was tempered by a surprisingly high level of political and human rights.
If human rights begin with the right to decent food, shelter, clothing and medical care by the workers, there was example after example that employers were actually doing so. If a commitment to human rights also involves real sanctions to employers that do not provide these things, I also saw plain warnings from the government promising prison for failures.
I saw evidence of the right of protest on two streets, each protest involving several hundred people.
In corporate governance, I saw a minority shareholder exercise his rights by shutting down the business.
In intellectual property enforcement, I saw shops closed by the police for dealing in illegal merchandise.
Taken together, these experiences lead me to believe that the government of China understands that democracy is a good thing to attain, but that it must be bought like other goods as the country can afford it. So, I saw that minimum wage standards are raised because economic activity has reached a certain point, freedom of religion being cautiously promoted because it contributes to social harmony, environmental standards raised because they promote the general welfare, health care granted to differing segments of the populace since the city can afford it, and internet use permitted because it helps economic activity.
And, I got to listen to the factory owner brag about his three children as a status symbol—after all, the last two cost him three years family income each. And plastic bags at checkout—forget it, they are now illegal.
Over time, this begins to approximate a constitutional monarchy rather than an authoritarian system. Recently, local administrators were told they had to answer questions posed by the press to keep their jobs. I did not think the petitioners felt they were out of luck—just that they had to convince those in power to meet their needs. The underlying justification: These sessions tended to reduce corruption.
But—and this is an important difference for US policy—I do not think that the Chinese government will start paying attention to what the US has to say about Darfur, or about Tibet, or about other specific issues the US cares deeply about. Because Chinese people will talk about politics and do support their government. The reason—they feel the government is doing a good job of moving the country forward and that things are getting better for them in the things they care about most.
The Chinese people that I spoke with—of several demographics--are deeply informed and interested in the US elections and are watching carefully what the US does as an example of how a modern democracy and superpower should act. So, when China emerges as a superpower, I draw the conclusion the US is likely to be the model they follow.
By then, they will be able to afford a lot more democracy and they have the will to do so. And, they will have got there on their own.
I am not sure that democratic capitalism will defeat authoritarian capitalism. If you look at Taiwan and South Korea, their economic growth rates were higher when they were under authoritarian rule. Authoritarian China beats democratic India years after years. In fact, some of reforms in India looks an emulation of China's experiences. I also like to point out that the development of China is under hostile international environment. Even nowaday, some of the boycott is still in place. There is no Marshall plan for western Europe, or the China lobby group for Taiwan. This makes China's development doubly impressive. After all, it is quite silly to obsess with who beats who. If somebody does something so phenomenal, we should abandon our prejudice (or idealogy) and try to learn something from them, regardless how many differences we have. Honest, the Chinese learn a lot from us, but we practically learn nothing from them. Robert Reich is an economist, shouldn't he study a little more about the Chinese economy to see what makes them tick?
Maybe a question Mr. Reich should ask is whether Americans themselves are not so addicted to getting ahead and getting more stuff that they will be willing to trade the freedoms democratic capitalism affords for the wonders authoritarian capitalism delivers? Will Americans sacrifice their ethics and religious beliefs to embrace philosophies that can deliver greater economic prosperity? Have profit and wealth in fact become our gods? Maybe atheists do not have to fear "In God We Trust" on money, for maybe the money itself is our God.
Mr Reich, I'm not so sure capitalism contributes to democracy. Working in a large company, you experience what amounts to citizenship in an authoritarian state. The lowest-level employees are expected to keep their opinions to themselves: if they don't like the direction the company is going in, they can leave. Such a record follows an employee.
Mussolini talked about corporatism.
Cortporatism should do well in China, which historically has seen every attempt at a strong center fragment after a generation or two into into states run by warlords. It's already happening in China today: the farther from Beijing the less control the central government has over manufacturers of counterfeiting, copyright violations, patent infringement or conditions of the workers. And the more experience American businessmen get in China the more able they are to balance the WTO agreement game in Beijing against the corrupt practices that prevail in the provinces where their factories are.
Most of these businessmen would like very much to be able to operate the same way in the United States, and their lobbyists and their politicians are engaged in the long game to enable them to do so.
