Monday, August 11, 2008

Han Deqiang - China's Renewal - Reform Yes but Socialist Reform not Market Reform

Besides Gong Xiantian, some of the most well-known critics of capitalist reimposition, or at least its shock-therapy methods, include economists Yang Fang and Zuo Dapei, both with the Chinese Academy of Social Sciences; ; former chief of the National Bureau of Statistics Li Chengrui; Ji Baocheng, president of Renmin University in Beijing (also known as the People’s University); Lang Xianping, U.S.-educated radio personality and teacher at the Chinese University of Hong Kong; Han Deqiang of the Beijing University of Aeronautics and Astronautics; and Wang Hui, a language and literature professor at Tsinghua University in Beijing.

Here we look at the views of Comrade Han Deqiang

This edited introduction is from Han's book: The Economics of Competition: A Critique of Paul Samuelson's "Economics," published by Jingji Kexue, Chubanshe, 2002

"The Economics of Competition: A Critique of Paul Samuelson"

by Han Deqiang

A Collective "Prisoners' Dilemma"

China has switched to a market economy for a whole decade now. People once hoped, and may still be dreaming that, as the institution matures and perfects itself, China would become a strong developed country, where democracy rules and people enjoy high quality of life not only in material terms but also in spiritual and moral terms.

But reality seems to be moving farther away from such a dream. Since the late 1990's, all kinds of Chinese enterprises have gone bankrupt en masse. With it came increased unemployment, lower mandatory retirement age, lower wages for workers, decreased income for farmers and slack domestic demand. With the influx of foreign enterprises and foreign products, many Chinese enterprises have switched their business lines because they no longer have the confidence to run a high-tech business at a profit. They become de facto employees of those foreign enterprises, earning meager fees for their efforts.

In the meantime, there has been a staggering number of tragic mine accidents that kill thousands year after year. Major accidents involving large number of deaths, such as firework factory explosions, plane crashes, as well as fires at cyber cafes, night clubs, theaters and shopping malls have occurred with mind-numbing frequency; villages and small towns are flooded with fake or poor quality products; drugs and AIDS are rampant.

Not only has corruption become a normal way of doing things among many officials, but it has also become a normal part of the values/belief system of the collective national psyche, marked by an egregious lack of civil-mindedness and ethical awareness. Teachers, doctors, lawyers and accountants all share the belief that " One must make use of one's position of power for self-enrichment before one loses it"; schools have become agencies that sell diplomas;hospitals force patients to pay up or leave.The lawyers are again edifying their clients by reverting to an old saying:

"court houses are for those who have money, not those who have a case";accountants have learned to "twist the numbers for money"; reporters routinely accept "gifts" of cash from those who desire a favorable write-up,young girls are not ashamed of providing sex-related services as a source of income and businessmen openly boast about their ability to concoct a confidence scheme to lure unwitting investors.

As this tide of corruption engulfs the nation, it is the workers and farmers who work the machines and land that are left utterly powerless and unable to defend themselves. They work more than twelve hours a day at the risk of death, maiming and deterioration of health, earning a meager pay that is often reduced or withheld by employer on arbitrary grounds. Their low income barely feeds their families. Finally even the elite segment of the society, which has ready access to state power, capital and knowledge, feels threatened by this rising tide of corruption.

Members of the ruling elite have now begun to talk at length in the media about the importance of "honesty and integrity". But the irony is that they only became rich because of their lack of honesty and integrity. They don't have the right to talk about "honesty and integrity" until they part with their ill-begotten wealth. When they, however, become ordained spokespersons for integrity,the word integrity has been rendered largely meaningless.

What went wrong? Why is it that where dragon's seeds were sown, only fleas have been reaped? Many Believers of market economy, who are not blind to the distressing realities of China today are wondering aloud: why has the market economy, when transplanted to China, produced so many undesirable consequences, just like the proverbial sweet orange trees, which would bear only bitter fruits when transplanted to the soil on the other side of Huai River? Is it because the soil of China is uniquely unfit for healthy growth of market economy?

China, however, is by no means a unique place where market economy has gone astray. Lately a huge bitter fruit has likewise been born in the United States, which is widely regarded as paragon of market economy. Enron,WorldCom Communications and Xerox Corporation have one by one been revealed to cook their books. And it was the venerable eighty-year-old firm, Andersen Accounting, that helped them do it. And before these were revealed, stocks onthe NASDAQ, a very mature stock exchange, lost more than 60% of their market value, or about half of U.S. GDP.

This is by no means something new. Back in the 1980's, the US government was forced to infuse close to 100 billion US dollars into saving and loan institutions in order to save them from bankruptcies. During this time period, junk-bond king Milken launched many hostile takeovers, causing well-run corporations to be broken apart or auctioned off one after another.


1 comment:

Anonymous said...

Timely site - lots of food for thought