Communism vs Capitalism

Remember when the world was divided among communistic and capitalistic countries?  When the Chinese were communists?  Well, the Chinese still call themselves communists, but today they are also capitalists.  In fact, if you visit China today you will find the most dynamic capitalistic nation in the world.

Beyond that, China also wants to be a power to be reckoned with and the Chinese have made that goal a national priority.

However, it wasn’t too many years ago when the West was having its way with China.

Consider the two periods in Chinese history now referred to as the Opium Wars.  The first was between 1839 and 1842, and the second was between 1856 and 1860.

Opium was smuggled by merchants from British India into China, in defiance of Chinese laws, resulting in open warfare between Britain and China in 1839, and further disputes over the treatment of British merchants in Chinese ports resulted in the Second Opium War.

China was defeated in both these wars, requiring it to tolerate the opium trade.

Britain then forced the Chinese government into signing the Treaty of Nanking and the Treaty of Tianjin, known as the Unequal Treaties.  These treaties included provisions for opening additional ports to unrestricted foreign trade; for fixed tariffs; for the recognition of both countries as equal in correspondence; and for the cession of Hong Kong to Britain.

Several countries followed Britain’s lead seeking similar agreements with China, and many Chinese found these agreements humiliating which lead to the Taiping Rebellion (1850–1864), the Boxer Rebellion (1899–1901), and the downfall of the Qing Dynasty in 1912 which put an end to dynastic China.

Next came the Cultural Revolution: A violent mass movement in the People’s Republic of China that started in 1966 and officially ended with Mao Zedong's death in 1976.  It resulted in social, political, and economic upheaval; widespread persecution; and the destruction of antiques, historical sites, and culture.

It was launched by Chairman Mao on May 16, 1966 when he alleged that liberal bourgeois elements were permeating the Party and society-at-large and that they wanted to restore capitalism.  Mao insisted, in accordance with his Theory of Permanent Revolution, that these elements be removed by a violent revolutionary class struggle manifested by mobilizing China's youth to form Red Guard groups throughout the country.

Chairman Mao did change China, but his Theory of Permanent Revolution died with him and capitalism has since re-entered the Communist Party and Chinese society.

Today, Chinese cities are booming and more building cranes are being used in them than in the entire United States.  China’s super-highways are filled with modern cars. Its deep-water ports and airports are world class.  Its research and development centers are state of the art.  And, at its current rate of growth China will soon be the largest economy in the world.  And a power to be reckoned with.

As a side note, China’s navy is already larger than that of the US.

Recently, Robert Reich wrote:

“China’s innovators, investors, and captains of industry are being richly rewarded. They live in luxury housing developments whose streets are lined with McMansions.  They feed in fancy restaurants, and relax in five-star hotels and resorts.  [China’s poor live in an entirely different world, but a tax-free world due to China’s tax structure and implementation of capitalism.]

China shows that when it comes to economics, the dividing line among the world’s nations is no longer between communism and capitalism.  Capitalism has won hands down.  The real dividing line is no longer economic.  It’s political.  And that divide is between democracy and authoritarianism.  China is a capitalist economy with an authoritarian government.

For years, we’ve assumed that capitalism and democracy fit hand in glove. We took it as an article of faith that you can’t have one without the other.  That’s why a key element of American policy toward China has been to encourage free trade, direct investment, and open markets.  As China becomes more prosperous and integrated into the global market -- so American policy makers have thought -- China will also become more democratic.

Well, maybe we’ve been a bit naive.  It’s true that democracy needs capitalism.  Try to come up with the name of a single democracy in the world that doesn’t have a capitalist economy.  For democracy to function there must be centers of power outside of government.  Capitalism decentralizes economic power, and thereby provides the private ground in which democracy can take root.

But China shows that the reverse may not be true, that capitalism doesn’t need democracy.  Capitalism’s wide diffusion of economic power offers enough incentive for investors to take risks with their money.  But, as China shows, capitalism doesn’t necessarily provide enough protection for individuals to take risks with their opinions.”

Robert Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley.

The Rise of the Giant Panda may in fact teach us new rules for economic engagement as well as new rules for governance.  Rules we may never agree with, but rules we must compete with if we don’t want to be relegated to history’s dustbin full of  “The Rise and Fall of xxx “ countries.