Are we seeing the emergence of a new economic system Post-COVID 19?

513

I am in no mood for conspiracies. That news report showing a US scientist arrested for allegedly selling confidential medical related literature to China is disconcerting but it is not enough for me to say that this pandemic is part of a grand plan, a conspiracy perhaps, of people who want to usher in change in the world. Even if this thought is proven true in the future, it does not benefit everyone if such an idea is propounded.

What this piece is trying to solve is the question– is there a correlation between China’s plan of announcing its five or ten-year economic plan and this pandemic? The world expected China to announce its grand economic strategic plan based on Xin Jin Ping’s thought. This plan, says international observers could rock the world. Obviously, the announcement of such a plan got scuttled after this outbreak was announced.

That plan would have enhanced China’s image as an emerging economic superpower. And conversely, that would have further worsened feelings of insecurity of its competitors, namely the United States and European powers such as Germany. For more than ten years now, the Western powers had not recovered from the financial crisis of 2007/2008. It has, obviously demonstrated the correctness of pooling financial resources thru international cooperation, but these did not lead to the expected rebound. It made the treasuries of these powers short of a few billions and made it extremely harder for these economies to recover. And who, might you ask, benefited from this crisis, despite it also victimized by it? You guessed it, China.

China’s strength lies on its humongous industrial base, strong Human Resources and centralized leadership. I stressed “leadership” because the government of China is both centralized and decentralized–up to an extent allowed by the ruling powers.  China, for the past few years, represented a new governance paradigm which directly threatens the liberal capitalist democracy being espoused by Western states and its allies. Francis Fukuyama had prematurely declared the end of History in the nineties when he saw the walls of Berlin crumble, but he hasn’t expected that such a fall failed in completely changing the politics or the powers that control politics in communist states. Marxists are astute students of dialectics and unfortunately for Liberals, this dynamic law currently govern the very engine of Liberal thinking—the world capitalist economy.

While the modern era had not seen the demise of capitalism, the world had, nonetheless, seen how capitalism adapted itself to different governance models. Capitalism does not care if a government is being run by rapacious Totalitarians or pragmatics or compromisers or even people who imagine themselves with halos. The simple fact about capitalism is survival, and any which way you see it or perceive of it, this world system thrives in almost all situations–be it in prosperity or in poverty. The fact is, the more pauper an economy is, the better to apply the laws that govern capital because capital promotes advancement. Like an amoeba or a virus, capital just does adaptations, transformations and replications of itself once its laws are in motion.

Nowadays, one can conveniently accept the possibility of a Socialist state advancing free market economics the same way as a despot in some South African or Southern American state. In both states, free markets behave in a similar fashion, for as long as the government respects these laws and do not use its powers to alter its intended course.

But, even if governments do intervene,  when that intervention is directed at enhancing the economic environment where free market is, the system still works. In China for example, the national government subsidizes state and private enterprises under the dictum of “no one losses.” In the Western perspective, this is utterly disallowed due to the perceived sanctity of the separation of state and business. When an enterprise dies, it is an acceptable consequence of its inability to adopt and survive in a harsh, and highly competitive world.

The 2007/2008 financial crises which hit the world saw such state interventions arose when governments of the West opened their coffers to reinvigorate their economies. The lessons though gleaned from this crisis is that those funds benefited only the multinationals and the banks whose practice is simply to promote annual profits instead of assuming or absorbing certain losses for the benefit of the global good.

It may be that this China practice of assisting businesses who are being victimized by the brutality of the economic games they are in, are somewhat being adopted by Western powers as we speak now. Those stimulus packages are practically unheard of a century ago. Classical capitalism and promoters of free market economies do not agree with governments encroaching on their territories because they perceive themselves as totally separate and operating in a realm far too complex and far too sophisticated for the tastes of politicians.

The dangers actually of governments behaving as enterprises or at least becoming sources of funds of distressed sectors lurk since these monies are public in nature and are not to be tinkered with by private companies and banks. They belong to the people. Government tax the people who then expect those taxes to be their future pensions or at least, be used to improve their living standards thru paved roads, infrastructural developments and the like.

When governments use these public funds in the name of avoidance of crises, this practice is now commonly perceived as “just” and “legal.” However, whatever one may look at it, it is entirely unethical and immoral. Of course, in a liberal democratic government, people expect their governments to behave and protect these funds in the name of “national interests.”

China represents this ideology, one that is founded on free market economics complexed with respect and obedience to the rule of law. Is the world now following its lead, and using this pandemic as a ruse, nay, a reason to break that traditional separation of state and private enterprises? Or, there is another emerging paradigm one that considers governments as just ordinary corporations whose service is of public nature but the way it uses or spends public monies is dependent on the national interest dictated by the Powers themselves? Such a thing smells corruption or at least a toleration of it, because, again, capitalist enterprises are expected to generate their own capital and not hope for a crisis to occur for them to avail of government funds to cover their losses, in a system which is fraught with bifurcations.

Immanuel Wallerstein once said that China’s economy would eclipse that of the United States, Germany and the world by 2025. That is five years away. Of course, Wallerstein is not at all certain what kind of economy China would unveil but the features of such are already unfolded before the world. It is a simple formula— state-led economic planning which allows free rein in markets and state interventions to avoid defaults or bankruptcies. To be graphic about it, it is an economy shaped by the state, and nurtured like a flower. It does not concern itself with the mix of private and public funds–for as long as it stabilizes everything, particularly of politics, it is of no concern whether or not the government uses state funds for saving distressed companies and banks. There is no more distinction between what is private and what is public monies. The goal is simply not related to economics, but of politics.

Governance quality is one operative term that is of substantive value for CHINA. Jin Ping is not joking when it announced that the primary obsession of China is to build a moderately middle income economy whose citizens enjoy all the benefits of it– they have monies to spend, education is free, and jobs are a-plenty. In most states, these are to be shouldered by government using public funds. And in times of acute situations, these funds are to be sourced thru banks and financial institutions.

In China, the government is the one with the enormous funds and it is ready to spend for distressed sectors just to keep its economy afloat and its citizens happy. For the standard or basis of political support now for the government is inexplicably linked with the economy. Once businesses falter, and it affects the economy in a grand scale, there is government to inject life into them. This violates the tenets of classical capitalism. But this very same paradigm is what keeps China a-float and highly successful. And this is now being tested by others. Why?

Two things: if this is the shape of things to come, and China is leading it, it would work if a string of national economies do likewise. The world must accept this China’s model otherwise, it would bring a more serious and more deeper freeze of the global capitalist economy which could inevitably result to what Marx already predicted a century and a half ago.

 

Advertisements

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.