Bernd Thaller/Flickr
World News /20 Nov 2018

Does the ‘Chinese Miracle’ have Clay Feet?

In this age of turmoil and discontent China has emerged as a bastion of stability. Other economies stagnate or even decline, but the Chinese economy boasts nearly 40 years of uninterrupted growth. It is a manufacturing powerhouse that produces goods for the rest of the world. Although detractors often comment disparagingly on China’s authoritarian political system, even the most uncompromising critics recognize that the Chinese government, in contrast to governments in many other countries, including the United States, does its job: it provides peace and stability that ensure the country’s continued growth and a better life for its citizens. Many look at China today with envy, if not admiration. Despite abundant criticism, China’s unique path of development draws interest as an effective response to the challenges of the modern world.

One certainly senses such interest in the recent piece that appeared in the New York Times entitled “The Land that Failed to Fail.” This lengthy installment—the first of two parts–certainly contains negative comments and criticisms. However, it also creates an unmistakable overall impression–at least to this reader–that China is succeeding where Western capitalism is failing. Given the turn to socialism for many on the left in America, one would not be totally wrong to interpret the article as a suggestion that communism in China is not entirely unattractive.

The author, Philip P. Pan, the Times’s Asia Editor and author of Out of Mao’s Shadow: The Struggle for the Soul of a New China, has lived in and reported on China for nearly two decades. He is not judgmental and successfully avoids ideological dead ends. The article focuses on facts without any visible sign of theoretical bias. His conclusion is that the Chinese leadership has created a very unique model for developing China—one that combines market economy and authoritarianism. According to Pan, this model has ensured the success that China has achieved in recent decades, emerging as one of the most powerful countries in the world and the premier producer in the world economy. While the author is cautious in his predictions, he does suggest that the Chinese model is likely to maintain China’s continued progress in the near or even the distant future.

An objective analysis of any phenomenon requires consideration of all possible explanations. The author clearly attributes the “Chinese miracle” to the wise decisions made by China’s leadership and the model of development that the government has adopted. He does not consider other possibilities to explain this success. For example, one could make an argument that, to a significant degree, China also owes its success to the circumstances that are both fortuitous and fortunate. There is no doubt that Chinese communist leaders deserve credit for using the existing opportunities, but that should not diminish the significance of the fact that they have not created these opportunities; and as the opportunities diminish or disappear, so the Chinese success may also follow.

In the spirit of objectivity this article will try counter arguments. The uniqueness claimed for the Chinese model consists in a salutary combination of market economy and hierarchical control. Indeed, market and hierarchical control are not incompatible principles. One should point out that this allegedly winning combination is not unique to China. Market economy and hierarchical control happily coexisted in Nazi Germany and in Communist Yugoslavia under Tito. Even many Western societies, including the United States, have shown their predilection to combine these two principles. Hierarchical approach is prevalent in Western business management; and government hierarchies have played and continue to play a defining role in Western society. So the Chinese are not the first and not the only who have tried this approach.

Confucius Temple in Beijing. (Bernd Thaller/Flickr)

One can also suggest that China’s success has been in no small degree due to the failure of the West to use the opportunities that it has created. In observing the developments of the last several decades, one has to conclude that the West has made enormous technological progress. This progress has freed much human labor from the necessity of performing routine physical or mental tasks. It offers many opportunities. However, the technological progress has also created a problem—the need to find the way to use the freed human labor effectively. So far, a solution to this problem has proved to be elusive. The failure means that the economy is not using its most valuable resource, which means that it is inefficient; and inefficiency diminishes economic competitiveness.

The failure of the West to come up with a solution to this problem has slowed down Western economies, increased their inefficiency, and diminished their competitive edge. Thus, ironically, the technological advancement has disadvantaged the West and presented an opportunity for China. The cost of cheap Chinese labor has made the use of this labor to be more cost effective than huge investments in technological innovations that also risk a further and precipitous rise in social tensions. The Chinese government has ingenuously exploited this opportunity and the rest is history.

The big question looming on the horizon, however, is: Will the “Chinese miracle” last and for how long?

As the Chinese economic juggernaut continues to surge ahead, it brings China ever closer to the same problem that the West has confronted. The Chinese economy will have to increase its efficiency, which means that it will have to start using human labor in ways that would use this resource more efficiently. In other words, as machines, computers, and robots increasingly replace humans, China, just like the West, will have to find the way to use the freed labor efficiently.

Indeed, the authoritarian nature of the Chinese political system can suppress the discontent that may arise as a result of the displacement of human labor by technology. Although it is a possible solution, it is short-term and undesirable for any country, including China. The long-term solution is to use human creative capacity. It is the most efficient way of using human resources. Unlike many other available resources, human creativity is the only resource that does not depreciate when used. The capacity of humans to create has no limit and can ensure infinite and accelerated growth. However, the efficient exploitation of this resource requires a fundamental transformation of the existing social and political practices.

The source of creation is non-hierarchical interactions among equals. Organizing social practice in a way that would sustain and stimulate the process of creation requires a universal recognition of human autonomy and agency, as well as the legal codification and institutionalization of this recognition.

In response to the advancement of its economy and technology, China will have to change its social and political practice in which hierarchical controls play a dominant role. The Chinese political and social system will have to undergo a major re-adjustment in balancing hierarchical and non-hierarchical interactions. Such re-adjustment is likely to present a major problem for the Chinese leadership. The political hierarchy of the Communist Party is the most important centripetal force that holds the country together. It is also the main factor that sustains the “Chinese miracle.” The Chinese Communist Party will have to find the way to end the dominance of the communist hierarchy and to balance hierarchical and creative non-hierarchical interactions in Chinese society and politics. Given the Chinese tradition of both communist and pre-communist rule, this change may prove to be very difficult; indeed much more difficult than a similar change in the West with its strong anti-authoritarian tradition and cultural values. At this point, the party may be resistant to take this step as it is likely to perceive such a step, with some justification, as a threat to China’s integrity. However, not undertaking this change is also not an option since the preservation of the existing practice will definitely impede China’s progress and increase social instability.

It is hard to say how soon the Chinese authorities will come face-to-face with this dilemma. Much will depend on how rapidly China progresses in the next few decades, how the West will evolve during this period, as well as some other factors. It is hard to look into the future, but it is also not impossible, because the future is already here–both for China and for the West. The Chinese leadership, just like Western leaders, will have to recognize this fact and think hard about solutions—the sooner, the better.

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