Mao vs. the market

Mao and the Market: an M&M that encapsulates the debate going on in China, which is reducible to the question: what has done most harm to China, Mao or the market?

On one side is the new left, which condemns the huge inequality and social injustice generated by the reforms undertaken by Deng Xiaoping in 1978. Yes, they say, China has lifted millions out of stark poverty. But it has done so at the cost of indices of inequality that not only exceed the US but make China look like Saudi Arabia. Why Saudi Arabia? Well, because of the immensity of the gulf between a narrow class of privilege and graft, and the millions of Chinese who live like foreign immigrants in their own country.

On the other side is the new right, which sees the state as a confiscatory entity handcuffing private property, and threatening economic liberty and growth. From this viewpoint, China's present ills stem from the timidity of the economic reforms, the lukewarm nature of recent economic liberalization, and the reluctance to wholeheartedly embrace the logic of the market. So, they say, a powerful interest group or lobby, made up of public employees, local cells of the Chinese Communist Party (CCP) and private entrepreneurs, have managed to hijack the structures of the state, encrust themselves in the center of the system, enrich themselves by corruption, and are effectively blocking economic reforms that would imperil their privileges and fortunes.

It is against the background of these debates that we must view the purge of Bo Xilai, the recently-ousted CCP leader in Chongqing, and thwarted aspirant to the party's Central Committee. Because, while it was a personal matter (his wife's implication in the murder of a British subject), the critical references made, à propos of Bo, to Mao and collectivization go far beyond personalities, and point to the desire of the new right and the entrepreneurial lobby to clamp a quarantine on the social policies that Bo implemented in Chongqing. These policies, centered on the regulation of land and immigrant residence permits, put a brake on the abuses of local officials, party cells, real estate promoters and entrepreneurs, who elsewhere in China are omnipotent when it comes to confiscating public land to hand over to entrepreneurs close to the party, and denying basic social services to workers from rural regions.

To just what extent Bo's fall will mean the abandonment of his Chongqing experiment in favor of other models, is hard to say. For the new right, the model to follow is that of Guangdong, based on liberalization and more exports. Although it generates social inequalities, the liberals consider these are open to correction a posteriori with redistributive policies, provided they do not handicap growth.

The important fact that emerges here is that at least one sector of the Chinese elite has concerns that we can share and comment on in the light of our own experience. How much to grow, and how? How to correct the inequalities associated with economic liberalization? What degree of social cohesion is needed to make a market economy function, and also a political system (though authoritarian)? Some say that China is different, and that we cannot understand it with our categories; but these debates show that we share much more than we thought. No one has the answers, but the fact of having the same questions and concerns is a big step. In our historical experience, democracy arises from the left's acceptance of the market as a lesser evil, and from the right's acceptance of the welfare state as another lesser evil. By some odd quirk, it is this sum of two lesser evils that makes democracy the greater good. Hopefully China will also discover that democracy can be the point of balance between those who distrust the state and those who suspect the market.