November 3, 2011
Economist Loretta Napoleoni explains why Capitalist China is an economic success story
By Olivia Ward
Economist Loretta Napoleoni has debunked capitalism and decoded terrorist money laundering. Now she has followed the money to China with Maonomics: Why Chinese Communists Make Better Capitalists Than We Do, a contrarian look at the dragon that’s taking up increasing space in the world’s financial room.
British-based Napoleoni spent years researching what makes the Chinese the world’s economic success story while superpower America slides down a slippery slope. On Wednesday, while in Toronto, she explained why China is still the “inscrutable East.”
Q: What “Western myths” stand in the way of understanding China?
A: The biggest one is that the Chinese are bad and we’re good. That they exploit their labour force and we don’t. Actually, it’s the other way around. It was the colonialists who went to China and introduced exploitation that was reminiscent of the industrial revolution. We have to understand that the Chinese are very different from us, and they don’t want to be like us at all.
Q: Including our insistence on democracy?
A: In the West, democracy means voting. For the Chinese, it’s quite different. It’s economic opportunity, and people’s participation at different levels. People who live in big buildings, for instance, meet and talk about their needs. Mao uses the word democracy continuously as a concept of “people’s rule,” not elections.
Q: And Mao Zedong probably killed more people than anyone on the planet except, perhaps, Joseph Stalin.
A: He was a dictator. But he did one remarkable thing: he reunited the country and ended the nightmare of colonization. That also killed a lot of people from 1860 to 1945. I don’t think China could have got where it is today without a regime that established the cohesion of the country. Would an open democratic system be better for China? Perhaps. But back in 1945, that is not a choice people were able to make.
Q: There are rumours in the West that Chinese communism will collapse.
A: If there was a Chinese Spring, they’d probably elect the Communist Party. In general, they’re very satisfied with it. That’s hard to understand in the West, where we are constantly dissatisfied with government. Of course, the Chinese aren’t totally happy, but compared with 20 years ago, they’ve moved ahead incredibly well, and there’s no desire to change things just now. They look at our kind of democracy and they don’t want it.
Q: Has China’s social contract survived the shift to a more capitalist society?
A: As long as the party supplies economic growth and welfare, they’re fine. It’s true, though, that the welfare system has been progressively abolished through the opening up of the economy. The trade-off was “we’re not going to guarantee you national health or full employment” or the famous iron rice bowl. But there will be the opportunity to own property and your own home.
China didn’t dismantle the welfare system overnight. It replaced it with economic development and modernization primarily through the private sector. Now, they are discussing the possibility of restoring national health, because they’re rich enough to do it, and they’ve got to the stage where they have to deliver more than just money.
Q: So, what happens to people who are poor and sick?
A: In the countryside, you can get minimal treatment. In the city, there isn’t a system for the very poor, but if you’re a migrant worker you go back to your village for help. It’s a big problem, but on the other hand, if you have to pay, health care is cheap and accessible. If you need very advanced treatment it will cost more, like the West.
Q: Is there Chinese medicine for a healthier Western economy?
A: Pragmatism. Forget ideology, and use whatever works. We’re in a huge crisis and still defending the economic model that brought us there. We’re afraid to re-think. We don’t turn to the policy of (John Maynard) Keynes (who believed in government spending to create jobs) because we think it’s socialism. If that’s what it takes to get through the crisis, why not? The Chinese used capitalism to save their country, and it worked very well. We should take that lesson of pragmatism from them.