Alberto Mingardi  

Dambisa Moyo and the conquest of the US by China

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Is the Chinese blend of capitalism, communism, and mercantilism an alternative to Western "democratic capitalism"? Author and economist Dambisa Moyo argues so in a recent TED talk, suggesting that Western countries (which means, first and foremost, the United States) need to "compete or cooperate" with the Chinese model.

As "competition" between states tends to involve armies instead of goods, I'm glad that Dambisa Moyo suggests that Western democracies should "cooperate", by "expanding trade and investment around the world, demonstrating how western liberal democracy and free markets are a good choice". Going the other way will do nothing to impose the "Western way of life" but it will almost certainly require the government seizing the liberty of Western citizens, in its attempt to succeed: paraphrasing William Graham Sumner, it would be the conquest of America by China.

I think Moyo is right in pointing out that there is no strong evidence that "democracy is a prerequisite to growth", whereas the opposite is true, i.e. a polity needs to enjoy a certain degree of prosperity to prompt a yearning for political equality, that typically resides within the middle classes.

What I am not so sure about is the extent to which we can talk of homogeneous "models". Opening trade (not to mention lower barriers to immigration) is often opposed, in Western democracies, precisely because it jeopardises the political distribution of entitlements - which characterizes, nowadays, our polities. On the other side, I am not convinced by the notion that the Chinese Communist Party and its leadership are an homogeneous bloc either.

It may be that the US and other Western countries will follow Moyo's advice. That can happen for a variety of reasons: in a sense, our societies may find it difficult to digest a bellicose attitude towards China, as they already suffer from anxiety concerning our efforts in the Middle East. Also, organizing "the West" as a trade bloc may turn out to be so difficult, that freer trade with China will be an inescapable bottom line. Again, perhaps China is already such an important trading partner for us, and that increasing the cost of trading with it might have a devastating effect. You can go on speculating.

What I think will not happen, is that neither Western publics nor Western ruling classes will acquire the consciousness to embody a different "model of development", and thus act upon that. Deliberate political determinations, if anything, will move us farther away from freer trade, not closer to that goal.


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COMMENTS (4 to date)
ajb writes:

It was not historically possible to separate trade from armies in earlier periods of time. Liberal England developed more long distance trade only when it protected its ships with convoys -- often from government sanctioned pirates. And in parts of the world today, both legal and quasi-legal constraints on trade often require hidden force to promote further cooperation. I suspect that as China starts to get belligerent (think of the current island disputes with Japan and the Philippines) some parts of this will reemerge albeit in diplomatically hidden forms.

RPB writes:

Leftist, western intellectual obsession with a technocratic government is nothing new. The first premise, not even examined here, is the efficacy of such a system. History has shown the long-run effects of the law of unintended consequences to be pernicious to growth and even internal stability of these systems. Last I checked almost half of China's GDP growth was due to construction spending, much of it devoted to ghost cities and buildings none can afford outside of the wealthy fraction of the population. Furthermore, their export-based economy has proven in the past to be precarious, resting its continued success of the political fickleness of its export partners and their continued appetite for their goods.

Lets not presume continued success until they reconcile their growth into something sustainable and something premised outside of misguided government mandate.

Hazel Meade writes:

Of course it's an alternative. Everything is an alternative. The question is whether it's a viable, stable system in the long run. Given that Capitalism already beat merchantilism about 300 years ago, I suspect not.

The main reason that China has grown so rapidly is that it has had a huge supply of cheap labor and has been willing to let foreign manufacturuers come in and exploit it. There is no mystery about it, and it's not at all attributable to anything you might label a "merchantilist" policy.

When the supply of cheap labor dries up, does anyone think that the merchantilist policies of it's government are going to be an advantage?

Ashok Rao writes:

"I think Moyo is right in pointing out that there is no strong evidence that "democracy is a prerequisite to growth", whereas the opposite is true, i.e. a polity needs to enjoy a certain degree of prosperity to prompt a yearning for political equality, that typically resides within the middle classes."

India is a strong example to the contrary. More so because it is a humongous chunk of the world. And Pakistan is poorer, but becoming a lot more democratic.

India was democratic in 1950 when it was dirt poor all across. Moyo's argument is simply not true.

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