CAPITALISM IN CHINA: Feel the Stones

If we combine a planned economy with a market economy, we shall be in a better position to liberate the productive forces and speed up economic growth.  Deng Xiaoping

   

Experts struggle to make sense of our own economy, let alone to understand a much larger, older, culture with a Communist government, that speaks Chinese. Every prediction by our experts about the Chinese economy for the last 30 years has been wrong. Completely wrong. So what's the secret of China's success?

  

No country has ever grown so fast for so long or lifted so many people out of poverty. China's government is the most popular on earth, and the most successful.  So, how does China Combine a Planned Economy with a Market Economy?
You start with very smart planners: professional problem-solvers who know how to interpret data. Like really smart engineers and scientists.  Then:

1. Make sure your professional, smart planners are honest. Very honest. No bribes. No "lobbying". No hanky-panky.

2. Give your professional, smart, honest planners complete independence from undemocratic media (media owned by rich men).

3. Don't try to make your professional, smart, honest, independent planners "popular". Engineers and scientists are the most boring people on earth. They'll never be popular.

4. Connect your professional, smart, honest, independent planners to the electorate so that they can get feedback before--and after--they implement their policies.

5. Don't rush them. Forget 24-hour news cycles. Try 24 months.

6. Even professional, smart, honest, independent planners make mistakes. Give them the benefit of the doubt so that they can revise their policies and try again.

7. Send your professional, smart, honest, independent planners to the provinces for 5-10 years. If they can manage a province of 100,000,000 people, maybe they can handle national government.

8. Own controlling shares in all the important industries, like banking and communications, to ensure that they act for the national, and not just private, good.

9. Make sure that your least fortunate citizens are gaining the most. If they're gaining then everybody's gaining.

10. Turn the market loose.

This is what China does. Any country could do the same. Policies and crises come and go but professional, smart, honest, independent planners can solve practically any problem.  

To understand the history of capitalism in China (which dates to the 16th. century) I strongly recommend

China And Capitalism, by  David Faure

Best Price $31.85 _or Buy New $32.18

David Faure is Professor of History at the Chinese University of Hong Kong. Less than 100 pages long, his book is well-written, clear, and made thoroughly enjoyable by the examples which he provides. Here's one: Unlike Western Europe, where by the eighteenth century business incorporation was increasingly governed by a law with the explicit recognition that gaining a profit was rightful and legal, eighteenth-century Chinese corporations remained ritual entities, established not directly to serve the interests of their members, but ostensibly to provide sacrifice for gods and ancestors. Compared to Europe, the Chinese corporation would have been akin to the medieval monastery, built for religious purposes but maintained as a powerhouse of economic growth, managing land and hostels, providing services--not without charge--for living and dead, and networking with kings and peasants. (pp. 96-7)

 Since we opened with a quote by Deng Xiaoping (the father of this approach), let's close with another: his advice to the Chinese people on how to proceed with this complex experiment:

Cross the river by feeling the stones

摸着石头过河

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