Earlier this year, I put together three sentences that summarize the post-1949 economic history of China.
- Crippling communist failure and suffering under Mao.
- Partial reform during the “Washington Consensus” era.
- Backsliding to more statism under President Xi.
For those of us who would like to see China liberalize and prosper, the vexing question is why President Xi has moved his country in the wrong direction.
Most recently, I speculated that the answer is basic government incompetence.
George Will wrote on this topic last week for his Washington Post column. He thinks the answer, at least in part, is that dictators like having a “party-state” that prioritizes political control over economic progress.
In Russia, then in Mussolini’s Italy, Hitler’s Germany and elsewhere, including modern China, Leninism provided a new model of government: the party-state. Except China cannot be both modern and Leninist. Modernity requires social openness… Lenin’s party-state…has…two incurable defects: All policies are subordinate to the primary objective of maintaining the party’s dominance. And the party incubates society’s elites, who insinuate themselves everywhere into allocating wealth and opportunity. Absent market signals, this produces cascading inefficiencies in the allocation of society’s human and material resources. …China is misleadingly said to have a “hybrid” economy of government planning leavened and disciplined by market forces. This suggests more orderliness than actually exists. Market forces are casually disregarded by the CCP’s innumerable tentacles. China’s “industrial policy” — pervasive government entanglement with private-sector enterprises — is a road to private-sector serfdom.
I definitely agree that China’s industrial policy has been an economic disaster (which is why it is so bizarre that some American politicians want to copy that approach).
But let’s focus on the earlier part of the excerpt, involving a strong “party-state.” Does this require bad economic policy?
It is certainly true that Mussolini, Lenin, Hitler, Stalin, and Mao all had very anti-free market policies, but there are historical counter-examples (such as Chile and Singapore) that show it is possible to have a combination of economic freedom and political oppression.
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Image credit: wuwow | Pixabay License.
