Friday, May 24, 2019

“We had everything before us, we had nothing before us”.

When I was young and would overhear (rare) conversations that my father and his friends had about their own young lives in the inter-war period, I would  often long for these years thinking how great it must have been to be growing up then, between 1918 and 1938, when three powerful ideologies, liberalism, communism (with its many mutually internecine shades) and fascism, clashed mercilessly across Europe and the world. Not only was what was on the offer in these ideologies so different, and in each case, powerful but the stakes were high. Choosing one or the other ideology (or in the communist case, one or the other subgroup) led most of the time directly into illegality, jail, or for many ultimately to death. The intensity of ideology is not measured only in the space of ideas, but in the space of risks people are willing to take to defend them.

The dreamlike enthusiasm and envy for those years were of course tempered by the knowledge that young people like my father lived then in the shadow of a great war. But perhaps the very life on the edge of the precipice added to the excitement. Perhaps that the belief that if you defeated fascism now, and it would not engulf the world into destruction and extermination, gave an extra zest to the life composed of equal measures of ideology and action.

I compared in my mind the excitement of that period  with what I regarded as an intellectually sterile age of the confrontation between the two immobile blocs of US capitalism and Soviet communism. On the one hand, stood US with its simulacre of ideology that could best be explained as utilitarianism-cum-pragmatism (hardly something that would move you), defended by people in boring suits, wearing funny glasses, and living in suburban homes. On the other had there was a crumbling edifice of state socialism that has not produced a single new idea since 1925, defended by dreary bureaucrats in fedora hats wearing light grey socks and shoes. Only the Third World offered some hope, novelty or excitement. It was, I thought, the only part of the world—Cuba under Castro, Egypt under Nasser, Indonesia under Soekarno, Ghana under Nkrumah-- that had vigor and youth. (We know that these things ended mostly badly; but they did not look like in the late 1960s or early 1970s).

This stalemate between two decrepit ideologies ended with the victory of liberal capitalism. And that ushered the most ideologically deadening period of all. The period 1990-2010 in its “pensée unique” and wooden language almost replicated the worst features of Sovietiana: a formulaic language of false unity of everybody and everything under the benevolent rule of liberal bourgeoisie. Like in Soviet  regimes, all contradictions were supposedly solved; once for ever. There were no new questions, and answers to all previous questions were provided. The whole world was just hurrying to become another Denmark where nothing of interest would ever happen.

But that stultifying intellectual world was exploded by the 2008 crisis, the rise of political Islam, and the rise of China. It exploded because it was (i) unable to address real issues and contradictions and supplied only ready-made formulaic bromides, and (ii) it wrongly assumed that people desire to be free of ideological choices. In other words, it is not only unlikely that the world  will ever become Denmark (the Middle East has been in turmoil for the past 4,000 years and is likely to be so in the next), but the world does not want to live in a society devoid of major ideological choices, cleavages and battles.

Now, the exciting times are back again. It is especially exciting for the young people because the richness of ideological choices they have before them is immense: liberalism, new socialism, nationalism, political Islam, Chinese political capitalism, probably more. In my father’s youth there were three strong, different and very potent brands of ideological cereals that you could buy in your neighborly market of ideas. During the Cold War, the offer was reduced to two, rather bland, types. Then in the (original) Fukuyama moment we had only one brand of rather tasteless cereals on offer. Nothing else existed on the ideological shelves, a bit like Moscow’s real supermarket shelves in 1975. But today, we are thriving with numerous cereals, some with potent taste, others very spicy, some sugary. The choice is great and it is all yours. The stakes, fortunately, are not as great as during the inter-war years in Europe and the world. We do not all crave to die for an ideology. But the intellectual excitement and ferment is back. My students are lucky. It is good to be young in interesting times, despite that much quoted Chinese curse.

Wednesday, May 22, 2019

The social and geopolitical origins of China’s rise

I read with pleasure the recent book “The China boom: Why China will not rule the world” by Ho-fung Hung. You should not be put off by the silly subtitle (probably added by the publisher to contrast Hung’s book to Martin Jacques’s). The book is much better than its subtitle implies. It gives a historical overview of how China’s economy functioned under Ming and Qing, goes over the well-known themes of how and why capitalists failed to create a coherent class in China (unlike in Europe), and how the paternalistic Qing slowed down that process by often supporting workers in disputes with owners, the very opposite of what capitalist-controlled European states did at the time. I wrote about these themes in my reviews of Arrighi, Jacques, and Pomeranz, so I will not go back to them.

There two other interesting things that I find in Hung’s book.

The first is: what is origin of China’s success? It is the mixture of the Asian export-driven policies (with open US markets) combined with Maoist centralization of capital through surplus exploitation of peasantry. For the reasons of paternalism and weakness, the Qing were never able to centralize capital needed for development. The post-Qing (republican) regime also failed in it but, in an era of chaos, let local gentry, merchants and the military be transformed into a number of regional  “military-predatory elites” vying with each other for power. China under the Republican regime was like Libya today. If you believe that Libya will soon begin to develop, then you can as well see in those multiple “militaro-predatory” elites of the early Republic a proto-capitalist formation, as some like Pseudoerasmus do. (I had a Twitter discussion on this issue with him.)

China’s rise differs in another way from the general East Asian experience. The flying-geese pattern (Akamatsu) whereby the most developed country gradually abandons less value-added productions to the next in line, and so forth, was upended by China, which started low but gradually took over the top-of-the-line products while not giving up the low-value added. Rather than flying in a orderly flock, China thus, both through its size and fast innovation, changed the model by becoming the hub through which many East Asian products are now exported to the US and Europe. The entire second part of the book is devoted to the interdependence between the US and China (trade surplus and investments in dollar-denominated T-bills) and while it may be, especially now, of significant interest for many I will not review it here.

For me, the second interesting part is what Hung regards as the class base of China’s current regime of political capitalism. This is a topic I deal with in Chapter 3 of my “Capitalism, Alone”. I wish I had read Hung before I completed the chapter because he introduces several interesting elements. Hung, like many others (including me), sees the dominant class to be “politico-capitalist” or in his formulation “politico-entrepreneurial” (p. 91). The “ruling bloc” combines people from the political sphere who benefit from political and economic power of SOEs, and capitalists, mostly from the Southern maritime provinces, who benefit from China’s “export machine”. Following Michael Pettis, an American professor at Peking University, Hung argues that three fundamental Chinese policies of (i) wage (and consumption) suppression, (ii) cheap yuan, and (iii) financial repression have their origin in this class structure.  Wage suppression and depreciated currency are obviously good for Chinese exporters (the new entrepreneurial class). Financial repression, combined with huge trade surpluses generated by the “export machine”, allow the political part of the ruling class to use SOEs for projection of its power domestically, and increasingly, internationally.

There is an additional twist that lovers of history’s convoluted implications would appreciate. Hung argues that the wave of privatizations that increased unemployment by thousands and reduced workers rights in the early- to mid- 1990s was possible only thanks to the repressive post-Tiananmen regime. The pro-democracy students and pro-Maoist workers who decried inequalities in 1989  “succeeded” in unifying different political factions of CCP, afraid of losing power, and made it possible for CCP to launch, after Deng’s “Southern turn”, the most far-reaching privatization and liberalization policies. In Hung’s view such policies would have met with much stronger societal resistance had they been implemented in the more permissive pre-Tiananmen climate.

Hung also explains why wage repression and urban-rural differences in China are, and can be, greater than they were in South Korea and Taiwan at the same level of development. The answer is also somewhat counter-intuitive but no less logical. South Korea and Taiwan had to be more careful and to spread the wealth to the countryside lest they create revolutionary conditions in villages or allow disgruntled rurals to move into cities. They had to be more careful because of proximity of China and the appeal of left-wing, pro-Communist, policies. But China does not have to “fear” the left-wing appeal of any nearby egalitarian power, and can thus pursue much more inegalitarian policies.

Let me finish with a small detail,

The book that was clearly written before the last US presidential election (although it was published in 2017), mentions, as a curiosity, on page 1, one “Donald Trump’s…entertaining [sic] bid for presidency in 2012”. The joke is on Hung.

Friday, May 3, 2019

Democracy or dictatorship: which works better?

Last night, in a response to something I had written on Twitter, a friend tweeted Oscar Wilde’s quip that “the trouble with socialism is that it takes up too many evenings”. And although Wilde wrote long before socialism got established anywhere, and although it looks like just a clever comment, I think there is more in it: like many artists, Wilde captured the essence of the advantages and the problems of a political and economic system even before it became a reality.

How come?

When I arrived in the United States, coming from the worker-management world of Titoist Yugoslavia, I was somewhat surprised how Americans took the strongly hierarchical, quasi dictatorial relations in the business world as fully “normal”. I was half expecting that workers would have a say in the choice of their “managers” (actually, for a long time, I could not even figure out who exactly is a “manager”) but of course they did not. The promotions were made by cooption or even direct appointment of lower echelons by the higher echelons. And of course, the management was selected by the owners themselves. So the system was entirely top-down: the top selected the down it liked to have.

It was remarkably similar to the political system from which I came. There too the Central Committee coopted its new members; these selected their replacements and so forth down to the lowest level of Communist Party cell. Formally speaking, American companies were organized like the Communist Party. In both cases, to paraphrase Bertold Brecht, the leadership selected their employees, or their citizens. In one case the dictatorship was in the social sphere, in another in the work sphere.

Democracy that in the US existed in the social sphere (with lower levels electing their own political “managers”) was replicated in the Titoist Yugoslavia in the workplace with workers electing their own workers councils and those electing directors (except in enterprises that were seen of special importance where the top-down system of Communist Party appointment held).

So there were two societies with key spheres of human activity (work and social) organized according to the exactly opposite principles. One of them won, another lost. The one that lost, lost because organizing the work sphere according to democratic principles is not efficient. When you do so, an enormous amount of time is spent on negotiating minutest details of work, pay, holidays, sick leave, right to take leave when a family member is not well, payment of overtime, cleaning of bathrooms, supplies of papers etc. etc. Academic departments in the US are what comes closest to labor management as existed in the socialist Yugoslavia. And hardly anyone would argue the academic department are organized in an efficient way. People who in such an organizational context win and become successful are those who are not really interested in working at all, but debating every issue until everybody gets exhausted and gives up. They have the patience to outsit and outlast everybody else in interminable discussions and negotiations. No issue is small enough that they would not discuss it ad nauseam. Obviously, hardly anything ever gets done under such circumstances.

But does not the same danger lurk in the political space? Do not citizen  initiatives, referendums and counter-referendums, law suits and counter-suits, carry the same danger that Oscar Wilde identified: that normal citizens do not have the time or do not care sufficiently about certain things so that the decision ultimately gets taken by those with the greatest patience, by those who have nothing else to do but to get engaged into these “consultations”? In a heavily commercialized world of today where every minute counts literally and in terms of income foregone (you can write blogs for money, or study for your exam, or drive Uber, or charge your neighbor for taking his dog for a walk), social involvement is almost necessary captured by professional NGOs. (I have noticed that many NGOs have presidents who, by the number of their mandates, approach Mugabe and Mubarak, but, unlike those illustrious leaders, can never be overthrown by their hapless constituents.)

This is where more technocratic political capitalism of the Chinese or Singaporean variety comes to mind. What it tells you is that the same efficient and dictatorial way in which the production of cell phones is organized ought to be extended to the political sphere. It argues that the two spheres are essentially the same. In both efficiency is reached by clear goal-directed activities which are technical in nature and which should not be subject to the constant approval by workers or citizens.

If these societies continue to consistently outperform societies where the social sphere is organized in a democratic fashion, there is, I think, little doubt that their appeal will be such that, in a hundred years, it may seem to those who are around so very quaint that people thought that in a complex society decisions should taken by democratic vote. The same as it seems to us today so very quaint to believe that people once thought that a decision about what a company should produce was supposed to be made by the majority vote of shop-floor workers.