Monday, August 08, 2005

It's not Democracy, it's Commerce

Brad Setser seems to agree with me on China, although we take different paths to get there.

Diligence and frugality should be practised in running factories and shops and all state-owned, co-operative and other enterprises. The principle of diligence and frugality should be observed in everything. This principle of economy is one of the basic principles of socialist economics. China is a big country, but she is still very poor. It will take several decades to make China prosperous. Even then we will still have to observe the principle of diligence and frugality. But it is in the coming few decades, during the present series of five-year plans, that we must particularly advocate diligence and frugality, that we must pay special attention to economy.

Introductory note to "Running a Co-operative Diligently and Frugally" (1955), The Socialist Upsurge in China's Countryside, Chinese ed., Vol. I. - Chairman Mao

A few months ago President Bush spoke of Democracy as one of the great forces working on men. I think he is confused. It wasn't, at least as I see things, love of Democracy that brought forth this new nation, to quote Honest Abe, but love of commerce.

This isn't to argue that the framers were wholly motivated by money, but rather to suggest that commerce was the glue that brought them in and held them together. The general path of western society over the past 5 centuries has coincided, with setbacks from time to time, with the evolution of commerce. Governments that worked well with commercial enterprise thrived and those that bucked the trend for too long, failed. The reason, in my view, is this; trade really does improve the material well being of man. It isn't just a slogan, it's true.

Don't get me wrong here. This is no homage to the great God Commerce. I too believe that man does not live by bread alone and that the cause of true satisfaction is not material comfort. But that don't mean that a man don't want some nice stuff if he can git it, if you know what I mean. That is, however misguided one might view the excesses of the drive, that it is evident in man, the species, is clear.

It is with deep respect for the channeled desire of man to improve his material comfort that I watch China. If you want to see a fire lit in the minds of men, look at commerce in China. As Jung might have warned Chairman Mao, the commercial archetype is buried deep in your people, they have thousands of years of history.

There is an idea economists speak of called the "self sustaining recovery" usually in connection with some government intervention. The sense I have of it is that some spark is added to a flammable substance and once lit, the fire burns on its own accord, a virtuous cycle. China turns away from its hermetic communal existence under Mao, on his death, right when the West decides to switch to the wide open capital account model and one generation later, WHAM-O, huge self-sustaining growth. I can't keep thoughts of the Sorcerer's Apprentice out of my head when I think of it.

It's an entirely new ball this mess gets sorted out is going to be fun to watch.