While We Americans Lounge around the Illusory Free Market Pool, China Is Taking Authoritarian, Predatory Capitalism to High Strategic Ground

© 2011 Peter Free

 

24 January 2011

 

 

Inability to think systemically about economic reality is doing the United States in

 

The proposition that the interests of American corporations parallel those of citizens and the nation is increasingly divorced from any sensible reality.

 

Corporations are not the enemy.  But their legal duty to profit on behalf of shareholders can no longer be seen as their sole obligation to the society that gives them to right to exist.

 

For at least one and a quarter centuries, Americans have thought that the nation’s interest paralleled those of its largest businesses.  During the first two-thirds of the last century, one might have made a sound case for the proposition, provided one included labor unions into the corporate ecology.

 

Today, free market ideology no longer matches global reality.  Chinese authoritarian entrepreneurship daily demonstrates the flaws in our systemic economic and geopolitical thinking.

 

Robert Reich made a comment recently that sums my long-held perspective:

 

 

China has a national economic strategy designed to make it, and its people, the economic powerhouse of the future.

 

They're intent on learning as much as they can from us and then going beyond us (as they already are in solar and electric-battery technologies). They're pouring money into basic research and education at all levels. In the last 12 years they've built twenty universities, each designed to be the equivalent of MIT.

 

Their goal is to make China Number one in power and prestige, and in high-wage jobs.

 

The United States doesn't have a national economic strategy.

 

Instead, we have global corporations that happen to be headquartered here. Their goal is to maximize profits, wherever they can make the most money.

 

They'll make things in America for export to China when that's most profitable; they'll make it in China and give the Chinese their know-how when that's the best way to boost the bottom line. They'll utilize research and development wherever around the world it will deliver the biggest bang for the dollar.

 

And no hyped-up trade deals are going to change this fundamental imbalance.

 

The U.S. labor force is now smaller than it was before the Great Recession began and most American families are worse off.

 

China is eating our lunch. Why? It has a national economic strategy designed to create more and better jobs.

 

We have global corporations designed to make money for shareholders.

 

© 2011 Robert Reich, The Real Economic Lesson China Could Teach Us, Huffington Post (19 January 2011)

 

 

Though Reich does not say so, the primary flaw in American policy is poor systemic thinking

 

The imbalance between Chinese and American policy that Reich points out is predominantly a philosophical one, now exposed by the undesirable effects of unconstrained globalism.

 

Americans are still in love with the long-ago vanished reality of completely free market capitalism.

 

They do not recognize that China’s devotion to the comparatively efficient, authoritarian manipulation of:

 

(a) existing industries,

 

(b) future industries,

 

and

 

(c) the development of the education and infrastructure necessary to achieve the latter —

 

is going to pose an existential threat to the United States’ survival as a nation that continues to have economically comfortable citizens.

 

In my view, there is no benefit to the American public in the United States being home to multi-national corporations, whose profits come almost completely at our economic and military expense.

 

 

A better economic balance is possible — one that involves collaboratively-achieved goals that benefit the American public, without harming American business

 

A balance between the old idea of the completely unhindered corporation and the new idea that corporations owe something back to the society they come from is achievable.

 

I see no reason why American business leaders cannot be counted upon to bring their entrepreneurial expertise to the table, even after the prevailing narrow profit-only ethos is expanded to include “profit and national benefit.”

 

Good minds tend to embrace new paradigms, when their importance becomes clear.

 

Germany, for example, advocates a combination of collaborative economic planning between public and private sectors.  It seems to work, though often with hiccups (as any democratically-achieved enterprise is going to have).  Scandinavian nations have similar outlooks.

 

In contrast, the United States appears to think that becoming the demonstrated graveyard of out-of-date, illusory ideological ideas is a good plan.

 

I would rather not travel that road.  How about you?