Chinese Factory Workers Riot.

[Illuminatus Primus]

Sooner or later extensive growth must slow; the USSR posted enormous growth rates when it was engaged in its original accumulation, but sooner or later you run out of peasants to kick off the land and feed into the industrial hopper, and growth must slow. China still has some 700 mil or so peasants tied to plots on an average of 1-1.5 acreage/plot (LOL @ Maoism, didn't succeed compared to Stalinism).

[Big Orange]

And keep on building factories that have essentially ruined large swathes of North America and Western Eurasia economically, with less Westerners working in factories that don't involve higher end military/luxury/specialist stuff and languishing on the dole, and in an internal PRC version of this process what happens to the workers in one province once their company relocates its factory to another province?

A mild necro, but things have kicked off in Hong Kong over ridiculous property prices and there's growing paranoia towards the PRC government:

Hundreds held at Hong Kong rally

Hong Kong police say they have arrested more than 200 people following demonstrations over rising property prices and proposed political changes.

Tens of thousands had rallied on Friday and police moved in to make arrests after some of the protesters refused to leave the central business district at dawn on Saturday.

Police used pepper spray to break up the protests.

A rally is held every year on 1 July, the day in 1997 Chinese rule returned.

Security bill

A stand-off had lasted for several hours overnight.

The arrests were mainly for obstruction and illegal assembly. Some protesters scuffled with police officers as they were taken to police vehicles.

The police said in a statement: "To restore peace and social order, as well as to guarantee public safety and to let the normal traffic resume, police decided to act and arrest the protesters."

A total of 228 people were detained.

One of the main aims of the protest was to stop a government proposal to scrap by-elections to the legislature and fill the seats according to earlier results.

The protesters see the move as infringing democratic rights.

They are also angry at soaring property prices.

Organisers said 218,000 people had taken part on Friday, although police said it was only a quarter of that.

Legislator Albert Chan Wai-yip, of the People Power party, criticised police actions.

Speaking to the BBC's Annemarie Evans after his release from custody on Saturday, he said: "They used physical force unnecessarily, especially the pepper spray without warning. It was not needed at all.

"The police totally disrespected public safety. We were still 400 metres from the chief executive's residence, all we wanted to do was hand in a petition. We were in a peaceful march."

But the police said only minimum force was used.

In 2003, mass protests forced the government to withdraw a controversial security bill.

The following year, chief executive Tung Chee-hwa stepped down.

Hong Kong reverted to Chinese sovereignty on 1 July 1997. People there have the right to protest, unlike in the rest of China.

BBC

Now Hong Kong seems to have been mostly business as usual since 1997 on cursory examination through a Western media bubble but there's protests held on the anniversary of the HK being absorbed by the PRC (with the pro-democracy protest this year getting quite big).

[montypython]

And keep on building factories that have essentially ruined large swathes of North America and Western Eurasia economically, with less Westerners working in factories that don't involve higher end military/luxury/specialist stuff and languishing on the dole, and in an internal PRC version of this process what happens to the workers in one province once their company relocates its factory to another province?

Now Hong Kong seems to have been mostly business as usual since 1997 on cursory examination through a Western media bubble but there's protests held on the anniversary of the HK being absorbed by the PRC (with the pro-democracy protest this year getting quite big).

Seeing how the US et al have repeatedly subverted and destroyed those who have attempted to improve themselves against imperialist economic domination, I'd have to say that turnabout is only fair play:

http://dissidentvoice.org/2011/07/russe ... -of-china/

Russell, Mao, and the Fate of China

by Thomas Riggins / July 2nd, 2011

In 1922 Bertrand Russell, then probably the most famous living philosopher in the world, published The Problem of China [POC]. This book was the result of Russell’s being invited to China to give a series of lectures and conduct meetings with leading Chinese over a period of about six months. In POC Russell diagnoses the problems facing China as a result of its semi-occupation by European and Japanese imperialism. In the course of the book he also makes several recommendations and predictions concerning the future development of China.

The future leader of China, Mao Zedong, was either present at one of Russell’s lectures or read a detailed account of it in the Chinese press. The purpose of this article is to discuss Russell’s blueprint for Chinese liberation and compare it to what the Chinese, under the leadership of the Communist Party, actually did. Another purpose is to point out that many of Russell’s comments about the role of the United States, made over 90 years ago, as well as what was needed in China, are still relevant today.

A word of caution. Russell considered himself a radical and a “socialist”, perhaps even a theoretical “communist” (although he was hostile to many of the actions of the Russian Bolsheviks) at this time. After WWII and up to the late 1950s Russell was a cold war anti-Communist, though not a ridiculous mindless one a la Sidney Hook and those in his milieu, before coming to his senses in the 1960s. I am only concerned, in this article, with Russell’s political statements and opinions in the early 1920s. Some of Russell’s views, while commonly held in the 20s, are completely politically incorrect by today’s standards — I will note them with explanation marks (!!) but otherwise I will not address them or pass over them in silence. These are usually remarks dealing with the nature of the “Chinese mind” or “character” as if all Chinese think a certain way.

“Questions”

This article will deal with Chapter One of POC: “Questions.”

In trying to understand China, Russell thinks he is dealing with a totally alien culture. He is forced to ask himself what his ultimate values are, what makes one culture or society “better” than another, and what ends does he wish to see triumph in the world. He says different people have different answers to these questions and he thinks they are just subjective preferences not amenable to argument. He will merely state his own and hope his reader will agree with him. Russell is no objectivist in morals. The ends he values are: “knowledge, art, instinctive happiness, and relations of friendship and affection.” He believes in the goals, if not always the methods, of communism (although he is not a Marxist), and thinks a socialist society will best approximate the ends he wants. There are elements in Chinese culture that also reflect his ends better than they are reflected in Euro-American culture.

Russell thinks a nation should be judged not only on how its own people are treated, but also on how it treats others. He finds China, in this respect, better than the imperialist nations of the West. In the following quote Russell uses the word “our” and I want to stress that he does not intend to restrict its meaning to the British Empire but uses it inclusively to refer to the major imperialist nations of Europe and the English speaking world or even to “capitalist” nations thus including Japan.

“Our prosperity,” he writes, “and most of what we endeavor to secure for ourselves, can only be obtained by widespread exploitation of weaker nations .” The Chinese, however, obtain what they have by means of their own hard work. China is radically different today but I think what Russell says about it is still basically correct and what he says about “us” hasn’t changed very much at all.

What happens in China, he says, will determine the whole future course of world history. There are tremendous resources in China and whether they are to be controlled “by China, by Japan, or by the white races [!!], is a question of enormous importance, affecting not only the whole development of Chinese civilization, but the balance of power in the world, the prospects of peace, the destiny of Russia, and the chances of development toward a better economic system in the advanced nations.”

This remark is as true today as it was some 90 years ago. Chinese civilization, however, is now, at least, much more in the hands of the Chinese, the world balance of power remains in flux, the destiny of Russia is still undetermined, and a better economic system for the West (i.e., socialism) is still a distant dream but may be positively influenced by the economic development of China.

I didn’t mention the “prospects for peace” and that is because in the short term Russell was absolutely correct: the civil war and revolution in China, World War II (in the Pacific), the Korean War, and the Vietnam War all had China, in one way or another, as their focus and the hope of eventually controlling her resources as a backdrop. Today, as well, many circles in the West, associated with international finance capital, see China as a future threat and the US military has contingency plans for a war with her. So Russell was quite prescient to see the economic resources of China as the focal point of contemporary history.

“Modern China”

Russell discusses the internal state of China, as he understood it in 1920-21, in his chapter “Modern China” in “The Problem of China.” He thinks there are only two ways the Chinese can escape from imperialist domination. The first way is for China to become a strong military power. Russell thinks this would be a disaster.

However, since “the capitalist system involves in its very essence a predatory relation of the strong towards the weak [a perfectly good Leninist proposition even if clumsily expressed], internationally as well as nationally” he proposes a second way for Chinese liberation. The foreign imperialist powers will have to “become Socialistic”. Russell thinks this is the only real solution for the Chinese.

It didn’t occur to Russell that China might free itself by military means and work towards socialism at the same time. It goes without saying that the Chinese would be waiting for kingdom come to be liberated if they had taken Russell’s advice and expected Europe and America to turn socialist.

Russell, as did many in his generation, expected a major war to eventually break out between Japan and the United States over which would be top dog in the far east, but did not see that war as an opportunity for the victims of imperialism to break free and become independent. At any rate, in respect to his “only” solution to Chinese liberation, Russell was wildly off the mark — despite his Leninist grasp of the nature of capitalism.

Russell did, however, urge progressives to support the fledgling government of Sun Yat-sen which was at this time battling the war lord system. No one at that time foresaw that the Kuomintang would degenerate into a fascist despotism under Sun’s successor, Chiang Kai-shek, or that the recently founded Communist Party of China would be the eventual vehicle both for Chinese liberation and regeneration.

Russell’s next comment was completely correct and was about an issue that, after the success of the revolution, the Chinese took very seriously. Russell wrote that “in the long run, if the birth-rate is as great as is usually supposed, no permanent cure for their poverty is possible while their families continue to be so large.”

The introduction of birth control and the one child policy, which was a drastic step and is now being reevaluated, probably helped to considerably contain the population from an unmanageable explosion (not to credit natural disasters and the unintended consequences of policies that turned out to be mistaken with respect to premature industrial expansion and agricultural reforms in the 1950s).

Another problem the Chinese would have to overcome before they could hope to compete with the West, according to Russell, was lack of a modern educational system for the masses. This too the CPC saw as a major problem and immediately after coming to power launched a mass literacy program and built schools and institutions of higher learning throughout China.

This was a prerequisite, Russell said, as Chinese workers would need education and skills in order to command decent wages (he did not foresee a socialist revolution in China). Nevertheless, industrialization in China, as in all other countries, would begin to develop by methods that are “sordid and cruel.” Intellectuals, he remarked, “wish to be told of some less horrible method by which their country may be industrialized, but so far none is in sight.”

Whether you are capitalist or socialist, it appears, if you are starting from a primitive economic base, the only way you can accumulate capital to make industrial advances is to take it from the surplus value created by the working class. As we will see Russell thinks state capitalism, or state socialism (they are the same for him), would be the best way for the Chinese to go — but he doesn’t envision a revolution.

Russell now hits upon a major problem which I think was responsible for some of the major errors of the Mao era.

There is one traditional Chinese belief which dies very hard, and that is the belief that correct ethical sentiments are more important than detailed scientific knowledge. This view is, of course, derived from the Confucian tradition, and is more or less true in a pre-industrial society.

One would think that Russell, with commitments to science as the basis for correct knowledge of the world, would hold that “detailed scientific knowledge” is always to be preferred; how would a pre-industrial society ever advance to a higher level without also developing science?

In the 1950s and 60s Mao pushed the line that politics (“correct ethical sentiments”) was the correct guide to action and could win out over any objections based on economic (scientific) considerations. This led to the twin disasters of the Great Leap Forward and the Great Proletarian Cultural Revolution. There was no basis in Marxism for the views he was espousing even though Mao used Marxist terminology to try and explain his thought. If Russell were correct, this would have been a case of the unconscious Confucian substrata in Mao’s world view manifesting itself in Marxist guise.

Mao, himself, was anti-Confucian at this time so even he was blind to the real origins of the reactionary policies he was peddling in Marxist dress. I should also point out that it was only one wing of Confucianism that held to this view — an Idealist trend that developed in the Ming Dynasty and that there were other wings of Confucianism that were materialistically motivated. Mao had indeed studied Ming Confucianism and was influenced by it in his youth, and, I think, unconsciously after he assumed power.

“Present Forces and Tendencies in the Far East”

Russell’s chapter, “Present Forces and Tendencies in the Far East” (in The Problem of China) deals with the balance of power in this region in the 1920s and focuses on China, Japan, Russia and America. I will omit his comments on Japan here and concentrate on China’s dealings with America and the influence of Russia. Russell points out that the interests of Britain are (leaving India to the side) basically the same as those of America — at least its ruling sector of finance capital and NOT “the pacifistic and agrarian tendencies of the Middle West.”

At this time Russell thought that the two most important “moral forces” in the Far East were those emanating from Russia and America. He thought the Americans to be more idealistic than the jaded imperialists running the European capitalist states. However, he thought that cynical imperialist views were an inevitability as a nation’s power increased and the Americans would abandon their idealism.

We must keep this in mind, he warns us, “when we wish to estimate the desirability of extending the influence of the United States.” Today we can see that Russell was right. The United States has evolved into the most cynical and ruthless imperial power in the world, encircling the globe with its garrisons and fleets, and subjecting whole nations and peoples to its bloody domination in search of power, wealth, and resources.

All this, however, was in the future. The benign United States that appeared to Russell was that of the Harding Administration and the Washington Naval Conference, presided over by Secretary of State Charles Evan Hughes. The conference was held from late 1921 to early 1922 and was the first disarmament conference in modern history. It was designed to reign in Japanese aggression in China, limit naval construction, and keep the Open Door Policy in place in China.

Russell thought America’s policy at the conference was a liberal one, but only because the outcome of the conference was in line with American interests in the Far East. What Russell really believed was that “when American interests or prejudices are involved liberal and humanitarian principles have no weight whatever.” Have we seen anything to contradict this assessment since the days of Warren Harding (or those of George Washington for that matter)?

If American plans for the future economic development of China should be successful, Russell thought it would be disastrous for China. It would certainly be good for America and her allies, but would involve “a gradually increasing flow of wealth from China to the investing countries, the chief of which is America [the CPC appears to have reversed this flow]; the development of a sweated proletariat [still a problem]; the spread of Christianity [another great evil]; the substitution of American civilization for Chinese [not yet but McDonalds and KFC have secured beach heads];…. the gradual awakening of China to her exploitation by the foreigner [China was already awake when Russell wrote]; and one day, fifty or a hundred years hence [around 1972 or 2022], the massacre of every white man throughout the Celestial Empire at a signal from some vast secret society.”

Well, the great awakening was already at hand when Russell wrote. He was just blind to it. China liberated itself in a little over 25 years, despite the best actions the US and its allies could do to prevent it, and no vast secret society sprang up to threaten every “white man.” The Celestial Empire has become a People’s Republic.

Russell’s vision of the future was off, but the definition he gave of what the West considers “good” government was spot on, even today: “it is a government that yields fat dividends for capitalists.” This is still the game plan in the 21st century.

Russell now embarks on some ill founded speculations which, nevertheless, hint at a grain of truth. He predicts, for example “it is not likely that Bolshevism [as seen in Russia-tr] as a creed will make much progress in China.” He gives the following three reasons:

1) China has a decentralized state tending towards feudalism whereas Bolshevism requires a centralized state. Russell doesn’t seem to understand a successful socialist revolution would reverse this tendency.

2) China is more suitable for anarchism because the Chinese have a great sense of personal freedom and the Bolsheviks need to have (and do have) more control over individuals “than has ever been known before.” This is strange. The Chinese had just emerged from an oriental despotism under the Manchus that had regulated everything including dress and hair styles for the population, and had no tradition of anything like “personal freedom” as had developed in Europe.

3) Bolshevism opposes “private trading” which is the “breath of life to all Chinese except the literati.” But ninety percent of the Chinese at this time were basically illiterate peasants most of whom were under the control of a feudalistic landlord class. The Chinese masses had more in common with the Russian masses than Russell seemed to realize.

The greatest appeal of Bolshevism, Russell said, was to the youth of China who wanted to develop industry by skipping the stage of capitalist development. But Russia was now engaged in the New Economic Policy and Russell thought this signaled a slow return to capitalist methods which would disillusion the Chinese.

But, Russell said, the fact that as a creed Bolshevism [i.e., Marxism] would not hold any lasting appeal, Bolshevism “as a political force” had a great future. What he meant was that Bolshevik Russia would continue to play the Great Game in Asia and follow in the footsteps of Tzarist imperialism with Bolshevik imperialism since “the Russians have an instinct for colonization” [!!].

Here is where Russell becomes very confused in his analysis. He doesn’t really define “imperialism.” Marxists at this time defined it as the international policy of monopoly capitalism based on the control of the state by financial capital sometimes allied with industrial capital. In this sense Bolshevik imperialism was a contradiction in terms. As far as “the Russians,” lumped together without any attempt at class analysis, having an “instinct” to become colonialists — such general statements are useless in trying to describe social reality.

Regardless, Russell thinks it would not be so bad for Russia to become hegemonic in Asia. The Russians could enter into more nearly equal relations with Asian peoples because their “character” [!!] is more “Asiatic” than that of the “English speaking-nations.” English speaking nations would not be able to have the same understanding and ability “to enter into relations of equally” with these strange inscrutable Orientals. As a result an Asian Block of nations would arise as a defensive block and this would be good for world peace as well as “humanity.”

Russell recommends that outside powers leave off meddling with the Chinese and attempting to impose their own values on them as the Chinese will, left to themselves, “find a solution suitable to their character” for their own political problems. This idea of “national character” is quite unscientific and if Russell had understood what he read of Das Kapital and other Marxist writings and substituted some such phrase as “find a solution based on their own historical development and class relations”, he would have made better sense. POC would have been better understood, in fact, if “national character” had been replaced by “historical development” whenever it occurred along with a brief description of that development.

Russell goes on to predict what the future of China will most likely be. Marxists, as great predictors of the future themselves, especially its inevitable trends and outcomes, understand what a risky business this is and should have great sympathy for Russell’s wrong headed prognosis.

Since the US emerged unscathed from WW I it had an excess of available capital to invest and would be the principal nation involved in China’s future development. “As the financiers are the most splendid feature of the American civilization, China must be so governed as to enrich the financiers.” The US will contribute greatly to building educational institutions in China so that Chinese intellectuals will end up serving the interests of the big Trusts just as American intellectuals do. As a result a conservative anti-radical reform system will be produced and touted as a great force for peace. But, Russell points out: “it is impossible to make a silk purse out of a sow’s ear or peace and freedom out of capitalism.”

The US will encourage the growth of a stable government, foster an increase in income to build up a market for American goods, discourage other powers besides themselves from meddling in China, and look askance upon all attempts of the Chinese to control their own economy, especially the nationalization of the mines and railroads, which Russell sees as a “form of State Socialism or what Lenin calls State Capitalism.” The reference to Lenin is in respect to the New Economic Plan (NEP) in Russia.

The US would also keep lists of radical students and see to it that they would not get jobs, try to impose its puritan morality on the Chinese, and because Americans think their own country and way of life are “perfect” they will do great damage to what is best in Chinese culture in their attempts to make China as much as possible resemble what they call “God’s own country.”

As a result of all this a “Marxian class-war will break out” between Asia and the West. The Asian forces will be led by a socialist Russia and be fought for freedom from the imperialist powers and their exploitation. These views are very different from those Russell will be representing in his future Cold War phase.

Ever the pessimist, Russell sees this war as so destructive all around that probably “no civilization of any sort would survive it.” When the actual war came it was very destructive, but it was a civil war between the bourgeois democratic capitalist powers and the authoritarian fascist capitalist powers into which the Russians were drawn against their will and from which the Chinese emerged as a free and independent people determined to build socialism.

Russell ends his chapter on a socialist note about the evils of the “present” (1920s) system of world wide capitalist domination. His conclusion is almost a perfect description of the world we live in today. “The essential evil of the present system,” he says, “as Socialists have pointed out over and over again, is production for profit instead of for use.” American power may, for a while, impose peace, but never freedom for weak countries. “Only international Socialism can secure both; and owing to the stimulation of revolt by capitalist oppression, even peace alone can never be secure until international Socialism is established throughout the world.”

“The Outlook for China”

The last chapter in Bertrand Russell’s POC is entitled “The Outlook for China”. Russell, writing in 1922, thinks that China (due to its population and resources) has the capacity to become the second greatest power in the world (after the United States). Today the US seems to be slipping economically so maybe China will become number one in the world sometime in the present century.

Three things will have to come about for China to reach its full potential. Russell lists them as: 1) The establishment of an orderly government [the CPC has accomplished this requirement]; 2) Industrial development under Chinese control [this too has been brought about by the CPC whether you call it "market socialism" or "state capitalism"]; 3) the spread of education [ditto care of the CPC].

All three prerequisites put forth by Russell have been attained if not quite in the manner he imagined in his book. Let’s look at some of Russell’s elaborations on these prerequisites.

First, the problem of orderly government. Russell says that in the 1920s China was functionally anarchic with battling warlords and weak central governments in the north and south of the country. He envisioned an eventual constitutional setup and a parliamentary form of government. But he cautioned that even so the masses of the people (Russell uses the term “public opinion”) will have to be guided by what amounts to a Leninist political party using democratic centralist methods.

Here is what Russell wrote: “It will be necessary for the genuinely progressive people throughout the country to unite in a strongly disciplined society, arriving at collective decisions and enforcing support for those decisions upon all its members.” That is just what happened under the leadership of CPC.

Second, the problem of industrial development. China, or any country for that matter, to be truly free has to also be economically free and that requires that it has control of its own railroads and natural resources. He thus thinks the Chinese government should own the railroads and the mines of China. He also thinks that state ownership of “a large amount” of the industry in China should also occur. “There are many arguments for State Socialism, or rather what Lenin calls State Capitalism, in any country which is economically but not culturally backward.”

Russell thinks that is possible for China, with a strong and honest government, to skip over the stage of capitalism and lay the foundations for socialism. This is tricky business as the Chinese would find out much later. If you skip too far and too fast you can trip and fall on your face. With the right government “it will be possible to develop Chinese industry without, at the same time, developing the overweening power of private capitalists by which the Western nations are now both oppressed and misled.” We can only hope that China is heading in this direction.

Third, the problem of education. Russell says that “Where the bulk of the population cannot read, true democracy is impossible. Education is a good in itself, but is also essential for developing political consciousness, of which at present there is almost none in rural China.”

By “democracy” Russell then, and almost all Western governments and their intellectual tools today, mean “bourgeois democracy”; i.e., “democratic” institutions and constitutions that guarantee the government will be controlled by, for, and of one of two contending classes that exist in the modern capitalist world; i.e., the capitalist class. Russell proclaimed his belief in “socialism” (Mao even said Russell believed in “communism”) but he never transcended the bourgeois concept of “democracy” inculcated in him by the British ruling class by which he was educated.

But the wider, and I believe correct, meaning of “democracy” (rule of the “demos” or people) includes other forms of government than those proclaimed by the bourgeoisie and their lackeys. It must refer to any form of government that objectively rules in the interests of its people; i.e., the vast majority of its population composed of working people, called by old time communists “the toiling masses” and historically personified by the “people’s democracies” and “people’s republics” of eastern Europe and Asia, and by the only completely democratic state in the Western Hemisphere, Cuba.

In just a few years after Russell wrote the above words, hundreds of millions of the peasants of “rural China” would develop a political consciousness that would lead to the overthrow of the rule by landlords and capitalists in China and the establishment, however flawed, of a true people’s republic. Then they learned to read.

Russell was both correct and incorrect in saying the following: “Until it has been established for some time, China must be, in fact if not in form, an oligarchy, because the uneducated masses cannot have any effective political opinion [or in the case of the US -- miseducated masses]. If that “oligarchy” is a real communist party (not one in name only) it will bring to the masses the correct political opinion that they and they alone control their own destiny and can abolish their subjection to a class that only lives off of their exploitation. The one party state may be the instrument leading to this liberation and its own eventual elimination, along with the state, but it also gives to the masses “effective political opinion” and if it doesn’t, it may find itself being eliminated ahead of schedule.

Russell hoped the Chinese, by combining “Western” science with their traditional culture, would create a new civilization free of the deficiencies of the capitalist West. What we are seeing now, in the 21st century, in China is perhaps the fulfillment of Russell’s vision but it is a synthesis of Marx, left wing Confucianism, and modern science. Hopefully the coming century will see the end of Western “civilization” as we know it, a predatory war based imperialist system attempting to enchain the world, and the establishment of a real new world order. The values of Bertrand Russell will be better remembered and served in such a world.

[mr friendly guy]

And keep on building factories that have essentially ruined large swathes of North America and Western Eurasia economically, with less Westerners working in factories that don't involve higher end military/luxury/specialist stuff and languishing on the dole, and in an internal PRC version of this process what happens to the workers in one province once their company relocates its factory to another province?

The thing is, this process isn't going to suddenly occur in one day and leave those migrant workers languishing. While lenovo is building new factories in the inland, it isn't suddenly closing its factories elsewhere to give an example. Gradually if this is done right (thats a big if, but no means does it mean China automatically fails) is that in the near future Chinese coastal regions will be producing higher end stuff, while poorer inland regions produce cheaper stuff.

The workers either learn to produce higher end stuff or they migrate back to their home provinces, get less pay but in return have lower living expenses. It might ultimately be worth it for them since a lot of these migrant workers rarely see their kids.

Its not like the powers that be in China just took a "she will be right" attitude and did make plans (see my previous article).

And frankly a lot of Westerners have a high standard of living already compared to developing nations, so, so what if they aren't working in factories? They are doing other jobs with good pay, like me. Of course we tend not to save $$$ which could come to bite us in the end, but thats our fault (not that I include myself in that observation since I do save and aim to pay off my mortgage pretty quickly and have other investments, but then I am apparently a weirdo who think saving is important).

[mr friendly guy]

While we are on the topic of China shifting production to the cheaper inland areas, here is an article from Xinhua. Granted Xinhua journalists don't seem to have the journalistic integrity of BBC's ex China correspondent James Reynolds (snigger, snigger) but here is the article.

http://news.xinhuanet.com/english2010/c ... 961415.htm

Rail linking Europe expected to open up China's less-developed West

2011-07-02

CHONGQING, July 1 (Xinhua) -- A cargo train filled with laptops and LCD screens has left Chongqing, a mega-city in China's less-developed western regions, starting its 13-day trip to Duisburg, Germany, which marks the official launch of the new transcontinental rail freight route.

The new rail route witnessed its official opening on Thursday night, after three test runs since March last year.

Clattering out of the station at about 9 p.m., the cargo train is set to travel 11,179 kilometers across the far western Xinjiang Uygur Autonomous Region, Kazakhstan, Russia, Belarus, Poland, before finally reaching Germany.

The route offers a major shortcut to the more traditional sea trade routes from Shanghai and Guangzhou, cutting travel time to Europe from about 36 days by container ship to just 13 days by freight train, said Huang Qifan, mayor of the inland business hub.

Huang said that the train is also safer and less expensive than sea transport.

Though the rails have been there for over ten years, the route is new as no train services linking Chongqing and Europe have been provided before due to complicated customs checks and cargo transfers, according to Ma Zhongyuan, director of Chongqing customs.

Last year, China signed a strategic agreement with Russia and Kazakhstan to open the new freight route, as the country is trying to build the inland labor-rich municipality into an international high-tech hub, especially for laptops.

Foxconn, the world's biggest contract electronics supplier, Acer, Taiwan's leading computer maker, and Hewlett-Packard(HP) are already in place in Chongqing to produce laptops.

In the first five months this year, Chongqing sold 2.43 million laptop computers abroad. The exports were valued at 840 million U.S. dollars, accounting for 20 percent of the city's total export value.

The city's export of new- and high-tech products totaled 14.26 billion in the period, up 182.5 percent year-on-year.

Officials believe the shorter transport time to Europe by railway will make made-in Chongqing notebook computers more competitive.

Last month, a new cargo air route also became available between Chongqing and the European cities of Moscow and Luxembourg.

The province-sized city is already a major transport center at the junction of China's prosperous East and poorer West, as cargo can be sent out of Chongqing along the Yangtze River, the country's longest waterway,via air and railway.

The new rail route will be used to link south China's Pearl River Delta manufacturing hub and the country's southwest industrial belt with Europe, officials said.

Just last mouth, a rail route connecting Chongqing and a port in the southern manufacturing hub of Shenzhen went into operation.

The transcontinental track will also boost trade between southeast Asia and the Europe, as railways have already linked Chongqing with the southwestern border province of Yunnan and Guangxi Zhuang Autonomous Region, said Cai Jin, vice president of the China Logistics and Purchasing Association.

Currently, the train only leaves Chongqing for Duisburg once a month, but train services may be increased to once per day in the future as the city's exports to Europe increase, according to Huang.

Basically given that these days the EU is China's biggest trading partner (yes thats right, China's biggest trading partner is not the US anymore) its another advantage of moving production to their underdeveloped western regions

[mr friendly guy]

And keep on building factories that have essentially ruined large swathes of North America and Western Eurasia economically, with less Westerners working in factories that don't involve higher end military/luxury/specialist stuff and languishing on the dole, and in an internal PRC version of this process what happens to the workers in one province once their company relocates its factory to another province?


Seeing how the US et al have repeatedly subverted and destroyed those who have attempted to improve themselves against imperialist economic domination, I'd have to say that turnabout is only fair play:

I most probably will end up starting a shit storm over this, but whatever. Considering that Europe had screwed China over with extra territorial agreements, invasion and selling illegal addictive substances like opium, I will like to join you in playing my small violin because China allegedly has "ruined large swathes" of Europe, not by invading, not by selling illegal drugs to the Europeans, but shock, horror, out competing them in the production of certain goods. My god the humanity. I wouldn't even call this turnabout at all.

edit - Its like how Stas Bush says in another thread, the double standard is sickening. Whats next? British newspapers whining about China being an irredentist power for executing one of their nationals for breaking China's laws? Oh wait, that already happened.

[mr friendly guy]

Oops, meant to type revanchist power, rather than irredentist power. While those two concepts are sometimes related, the former word is the one I am looking for. The article in question is from the spectator
http://www.spectator.co.uk/coffeehouse/ ... 2010.thtml

The point I was making about double standards is via the use of the word revanchist, which implies that China wants revenge on the West and to gain territory, based on nothing more than them following their own laws. In other words what China does gets exaggerated and blown out of proportion along with a not so subtle China threat meme.

In case its not obvious, I find BO numerous observations on China to be of the same vein, ie exaggerating things and using a double standard.

[Big Orange]

No, I don't think China should going back to what it was in the later 18th/19th/first half of 20th century when it was really on the ropes, partially because of infighting/mismanagement and largely through hostile economic/military invasion, leaving untold millions dead. China becoming economically developed is not bad in of itself and the West after over a 150 years of great success couldn't keep the monopoly on industry forever, however it was largely because immoral Western corporations double crossed the West by dislocating manufacturing and other jobs to China (and also India and Vietnam), making the global economy unbalanced, promting banks to hand out more liar loans to Western people with fewer jobs and stagnant wages, and helping to create the worst economic collapse since 1929. And these same Western companies could just as easily take away jobs as giving them to Asians and China should go ahead building up its own brands like Li Ning (when a fickle Western corporation like Nike dumps factories in China and Vietnam, relocating to somewhere in Russia, the EU or even America again, with even more automated factories).

Hong Kong is still pretty much its own mini-country and while all branches of the regional PLA garrison conducting military excercises at the same time HK citizens are marching in protest comes across as Sword of Damocles-esque, it still seems a sideshow and there have been more vicious rioting in decades gone by in Japan and South Korea when they were economically exploding (the ROK was run by a far right military junta from the 1960s to 1980s).

[Eulogy]

The problem isn't that China is modernizing, it's that they - like so many other nations - are growing too fast, too big. China simply cannot support the population it has for much longer, especially with rubs like the gender imbalance.

The employment situation doesn't help, of course.

[Big Orange]

The employment situation doesn't help, of course.

That's interesting, what kind of employment situation?

This has been touch before and perhaps even this footage has been posted before, but this is still pretty interesting:



Must be deeply depressing and boring for that poor schmuck at the toy shop.

[Lord Zentei]

The PRC has seen a lot of factory riots in the recent years. The urban-rural divide is becoming more and more visible, no wonder people get angry about getting pebbles while rich folks in the cities getting lots. It doesn't mean the workers are nationalist (protesting against corruption != nationalism - some of the protesting are Maoists, surely they aren't nationalist), so your "PRC is a patchwork of countries" thing is totally uncalled for.

This is an inevitable consequence of the PRC choosing the market as its mode of development. The blessing made the PRC a "factory of the world" and put the nation into a certain place in the so-called "world division of labour". Not the worst place, sure, but still a place where you don't get much leeway.

I'd say that it's entirely possible for self-described "Maoists" to be nationalistic, or at least non-internationalist, especially since they might see the push for capitalistic internationalism as the cause of their problems; though to be fair I'm pretty sure China is too smart for that. They would just have to be selective about their Maoism. Hell, even during Mao's actual rule, China could act pretty aloof from the world.

But in my view, the fact that the PRC chose the market as its mode of development is a good thing, despite the unrest it causes - or rather because of it. Now the workers see first hand the riches this can bring and the Party cannot deny them of it permanently. Obviously China's state of being the Low Wage Worker Zone of the world couldn't last forever.

however what about the rapidly increasing factory automation and America no longer wanting to be economically joined to China by the hip?

The economic conjunction of China and America isn't going away. But both of them will need to start looking elsewhere for cheap labour in the not too distant future.

Not sure if America can do anything about it. Laws of the market work, and these laws say that manufacturing in America is expensive. Autarky infeasible. So despite American elite's wishes (or maybe vain electoral bluster), don't expect any changes to the world economic order - even in what concerns the China-America relations.

Wait, what?

Laws of the market work

Who are you and what have you done with the real Glamorous Commie?

[madd0ct0r]

Can I tell you a story Big Orange?

There is a property market bubble and it will, probably, burst eventually (there is a small chance that growth in wealth will keep up with it.) It dosen't matter.

China has a lot of people who have made vast amounts of cash illegaly or semi-legally over the last two decades.
They can't put it in a bank, and even investment banking is seen as too risky. The money might be traced and uncomfortable questions asked.

So what do you do with it? Invest in gold or land.
Now the major cities already suffer inflated prices due to land speculation, and if these ex-politicians (oops.) pour their money into the same small areas there will be very big problems indeed. So what do you do?

Build a new city. Nearly all of those skyscrapers will have had speculative investors paying upfront, on the assumption that housing demand in China will not be satisfied for decades. This is speculating money that is diverted from the existing cities, reducing the inflationary pressure there. If the investors in the new city loose a huge chunk of their money when the unit is eventually sold at a loss, who cares? It's not like they earned the money in the first place. Likewise, most of them are in it for the long term.

If the new cites (at suddenly reduced prices) do take off, then congratulations, you've slightly reduced the migration problem on the old cities. Now, as an intelligent official, you should have found ways to be paid at each step. Of course, you'll need somewhere to invest that money. I hear there's a wonderful opportunity in a new condo complex just down the road...

[K. A. Pital]

I'd say that it's entirely possible for self-described "Maoists" to be nationalistic, or at least non-internationalist, especially since they might see the push for capitalistic internationalism as the cause of their problems; though to be fair I'm pretty sure China is too smart for that. They would just have to be selective about their Maoism. Hell, even during Mao's actual rule, China could act pretty aloof from the world. But in my view, the fact that the PRC chose the market as its mode of development is a good thing, despite the unrest it causes - or rather because of it. Now the workers see first hand the riches this can bring and the Party cannot deny them of it permanently. Obviously China's state of being the Low Wage Worker Zone of the world couldn't last forever

Rural, deep provincial workers don't see any "riches", those are mostly concentrated in urban zones. Hence the problem. The PRC certainly made some smart choices using what they had - and I'm always supportive of doing the industrialization with what you have - but that's progress done. As many governments have learned, past success does not excuse present failure. Ergo, China needs to adapt. I'm sure they will do something, in a while, as did most new industrial Asian economies which China is a typical example of. It doesn't automatically guarantee a problem-less future existence or development, though. Once you industrialize the question is "what's next", and so far this question has not been adequately answered in no nation of the world.

Laws of the market work

Who are you and what have you done with the real Glamorous Commie?

*laughs* To my honest knowledge, Zentei, I never said that laws of the market are not working (which would be preposterous for anyone calling himself a communist). The main issue is always whether what is produced by the work of these laws is a beneificial outcome.

[Lord Zentei]

I'd say that it's entirely possible for self-described "Maoists" to be nationalistic, or at least non-internationalist, especially since they might see the push for capitalistic internationalism as the cause of their problems; though to be fair I'm pretty sure China is too smart for that. They would just have to be selective about their Maoism. Hell, even during Mao's actual rule, China could act pretty aloof from the world. But in my view, the fact that the PRC chose the market as its mode of development is a good thing, despite the unrest it causes - or rather because of it. Now the workers see first hand the riches this can bring and the Party cannot deny them of it permanently. Obviously China's state of being the Low Wage Worker Zone of the world couldn't last forever

Rural, deep provincial workers don't see any "riches", those are mostly concentrated in urban zones. Hence the problem. The PRC certainly made some smart choices using what they had - and I'm always supportive of doing the industrialization with what you have - but that's progress done. As many governments have learned, past success does not excuse present failure. Ergo, China needs to adapt. I'm sure they will do something, in a while, as did most new industrial Asian economies which China is a typical example of. It doesn't automatically guarantee a problem-less future existence or development, though.

When I say that they see riches, I mean in their country, not that they experienced it themselves. Hence the comment that "the Party cannot deny them of it permanently". You need economic development to fuel social development. While it is true that fast economic development does lead to inequality, if China had instead chosen a slow-growth model, they would still be way behind the rest of the world economically, including east Asia, and their rural population would not be better off than it is now.

Once you industrialize the question is "what's next", and so far this question has not been adequately answered in no nation of the world.

A bit of a heavy handed statement there, no?

Laws of the market work

Who are you and what have you done with the real Glamorous Commie?

*laughs* To my honest knowledge, Zentei, I never said that laws of the market are not working (which would be preposterous for anyone calling himself a communist). The main issue is always whether what is produced by the work of these laws is a beneificial outcome.

Yeah, I know what you meant.

Anyway, I daresay that the outcome is beneficial (at least compared with their economic situation that was in place before!) given that they are an emerging global power now. Of course, the different regions of the country will develop at different speeds when they're using such a fast-growth model, that's almost inevitable. Of course, these same market laws now say that they would benefit from "outsourcing" their industry internally, or at least providing mass transit for workers in the west to get jobs in the east.


EDIT: fucking tags.

[K. A. Pital]

When I say that they see riches, I mean in their country, not that they experienced it themselves. Hence the comment that "the Party cannot deny them of it permanently". You need economic development to fuel social development. While it is true that fast economic development does lead to inequality, if China had instead chosen a slow-growth model, they would still be way behind the rest of the world economically, including east Asia, and their rural population would not be better off than it is now.

China's growth is a combination of multiple internal and external choices (many of which fall on the shoulders of First World nations or businesses operating therein), not just the choices made by the CPC. Fast growth with rampant inequality is also just one factor among many in the Chinese economic development. But yes, growth with extreme inequality at first is inevitable, especially if you choose the market. Not sure that non-market choices help here, either. The inequality between social strata in the USSR in 1930s-1950s was immense, too, and if we could calculate a GINI for the years, I wouldn't be surprised if they were not that different from China. But like I said, most of the problems are centered in the future, not in the past.

A bit of a heavy handed statement there, no?

A bit, but only a bit. There are satisfactory local solutions. We're still a long way from the global solution. So-called post-industrial economies are effectively hitting limits of growth - especially clear with Japan and their lost decades. Most nations experiencing high growth rates are either in the process of industrialization and hence not post-industrial, or they're industrialized nations that experienced a catastrophic industrial crisis - like many former Second World nations. So far no adequate solution has emerged as to what happens when you industrialize. When America and Europe first hit this question in the 80s, it was sidestepped - there was outsourcing, the enormous Soviet collapse which opened all of Eastern Europe to them, and there was the unsustainable credit-fuelled consumption growth. But the gift can't keep on giving, or so the recent crisis has demonstrated.

Yeah, I know what you meant. Anyway, I daresay that the outcome is beneficial (at least compared with their economic situation that was in place before!) given that they are an emerging global power now. Of course, the different regions of the country will develop at different speeds when they're using such a fast-growth model, that's almost inevitable. Of course, these same market laws now say that they would benefit from "outsourcing" their industry internally, or at least providing mass transit for workers in the west to get jobs in the east.

Heh. Yes, I already acknowledged as much. In China's case, the laws of the market have worked to the benefit of China as a nation and by proxy, to the benefit of many of its citizens. Global power is not to be ignored, too, in a world where coercing others is an important perk, heh. The regional imbalances are also expected, but it's been what, 40 years down the larger part of Chinese industrialization? One would reasonably expect China to try to flatten them. By the 1960s, the difference in incomes between Moscow and the regions in Russia wasn't as striking as it was in the 20s or 30s. Part of the problem is realizing the convergence goals with the market system already in place. Sometimes internal outsourcing to poor provinces does not correspond to a rise in wages; and capital outflows from the province simply concentrate somewhere in capital cities and then are used to fuel other types of expenses (by that I mean other than worker wages). China is still much a labour surplus economy, so that is to be expected.

[Lord Zentei]

China's growth is a combination of multiple internal and external choices (many of which fall on the shoulders of First World nations or businesses operating therein), not just the choices made by the CPC. Fast growth with rampant inequality is also just one factor among many in the Chinese economic development. But yes, growth with extreme inequality at first is inevitable, especially if you choose the market. Not sure that non-market choices help here, either. The inequality between social strata in the USSR in 1930s-1950s was immense, too, and if we could calculate a GINI for the years, I wouldn't be surprised if they were not that different from China. But like I said, most of the problems are centered in the future, not in the past.

Naturally, first world corporations are also a part of the decision making process that define China's current development model. But I doubt that they would be able to do so if the CPC wouldn't let them, right?

A bit, but only a bit. There are satisfactory local solutions. We're still a long way from the global solution. So-called post-industrial economies are effectively hitting limits of growth - especially clear with Japan and their lost decades. Most nations experiencing high growth rates are either in the process of industrialization and hence not post-industrial, or they're industrialized nations that experienced a catastrophic industrial crisis - like many former Second World nations. So far no adequate solution has emerged as to what happens when you industrialize. When America and Europe first hit this question in the 80s, it was sidestepped - there was outsourcing, the enormous Soviet collapse which opened all of Eastern Europe to them, and there was the unsustainable credit-fuelled consumption growth. But the gift can't keep on giving, or so the recent crisis has demonstrated.

I suspect that local solutions will be necessary before a global one emerges, particularly seeing as how the different regions of the world progress at very different rates. I'm not even sure that there is a "the" global solution, nor that the post-industrial world can be expected to grow at the same high rate indefinitely. In any case, the oft-maligned shift to the service sector has helped maintain growth in the west and east Asia, though not the fast growth of emerging economies (unsurprising, since much of that growth is them playing catch-up in any case). While it is true that it relies at least in part on outsourcing, I am unconvinced that this means that the system cannot work if the developing nations finally catch up.

Heh. Yes, I already acknowledged as much. In China's case, the laws of the market have worked to the benefit of China as a nation and by proxy, to the benefit of many of its citizens. Global power is not to be ignored, too, in a world where coercing others is an important perk, heh. The regional imbalances are also expected, but it's been what, 40 years down the larger part of Chinese industrialization? One would reasonably expect China to try to flatten them. By the 1960s, the difference in incomes between Moscow and the regions in Russia wasn't as striking as it was in the 20s or 30s. Part of the problem is realizing the convergence goals with the market system already in place. Sometimes internal outsourcing to poor provinces does not correspond to a rise in wages; and capital outflows from the province simply concentrate somewhere in capital cities and then are used to fuel other types of expenses (by that I mean other than worker wages). China is still much a labour surplus economy, so that is to be expected.

Well, of course, there's the fact that China has a population four times that of the USA, or for that matter four times that of the USSR at its height, so it's hardly surprising that they've got more challenges. Moreover, they had more ground to cover than either of the USA or USSR, since even during communism, large parts of China remained underdeveloped.

If we're going by market laws in a truly competitive and free market, then worker wages are defined by the marginal profit generated by the workers - if there's a failure here, it's probably either because of misplaced economic controls or because of the creeping influence of corporatism into government. Thus the solution is to remove those two factors, and to increase the marginal productivity of the worker. Honestly, I think that there's cause for some optimism on the third point, though perhaps not quite so much optimism on the first two.

[K. A. Pital]

If we're going by market laws in a truly competitive and free market, then worker wages are defined by the marginal profit generated by the workers

Only in theory, however.
http://www.econ.yale.edu/~granis/papers/cdp0900.pdf

Hayami and Kikuchi (1982), basically neoclassical in outlook, find that in Indonesia wages do not adjust on the basis of labor’s marginal product...

Naturally, first world corporations are also a part of the decision making process that define China's current development model. But I doubt that they would be able to do so if the CPC wouldn't let them, right?

*nods* Exactly. What I meant to say, however, is that "letting" First World corporations to do something is just part of the thing. Next they must make a choice. For China, geopolitical, economic and social factors have been in general contributing to this choice. But another nation may let foreign corporations in, and yet get nothing out of it (or even receive a net negative in the end when all externalities are counted and tallied). That can happen if there are other more advantageous investment territories (see: China, Malaysia) or if the advantages sought by the corporation are not connected to raising a diverse domestic industrial base in the nation but seeking to exploit just one particular sector or resource.

While it is true that it relies at least in part on outsourcing, I am unconvinced that this means that the system cannot work if the developing nations finally catch up.

It depends on the government and ideology, actually. If the government says that a flat life standard and a zero- or close-to-zero growth economy is in fact normal and everything's cool so as long as we support this position - the slowdown and convergence poses no problems. If the government and most scholars keep hawking about how growth is absolutely necessary and growth and consumption standards must be expanded by any and all means necessary (which can include everything from depressing the life standard of foreign workers diplomatically, or using war, or taking over some valuable resources to no longer be dependent on their market prices) - then I can see how this can grow into a big, big problem for which there's no adequate solution. In fact, the anger of First World populations at migrant labour and outsourcing does show that people are not going to be content with "growth with whatever means necessary" dogma, but neither (thanks to the constant bombardment from the media) will they be content with an ideology saying that growth is not the primary objective. This is the root of the problem in my view - the First World has outgrown the necessity for constant growth and any expansion of consumption; but the ideology is rigid.

[Lord Zentei]

If we're going by market laws in a truly competitive and free market, then worker wages are defined by the marginal profit generated by the workers

Only in theory, however.
http://www.econ.yale.edu/~granis/papers/cdp0900.pdf

Yeah, you need profit-maximizing enterprises in the agricultural sector and to beef up investments in other sectors for a healthy labour market. I really don't think it's insurmountable in a place like China, it might be a greater challenge in other third-world nations. Really, I doubt it's appropriate anymore to class China with much of the third world.

Naturally, first world corporations are also a part of the decision making process that define China's current development model. But I doubt that they would be able to do so if the CPC wouldn't let them, right?

*nods* Exactly. What I meant to say, however, is that "letting" First World corporations to do something is just part of the thing. Next they must make a choice. For China, geopolitical, economic and social factors have been in general contributing to this choice. But another nation may let foreign corporations in, and yet get nothing out of it (or even receive a net negative in the end when all externalities are counted and tallied). That can happen if there are other more advantageous investment territories (see: China, Malaysia) or if the advantages sought by the corporation are not connected to raising a diverse domestic industrial base in the nation but seeking to exploit just one particular sector or resource.

Yes, I see. Naturally, social and political reforms must go hand in hand with economic reforms, or they won't help the local people, that's obvious. Trade alone only provides opportunities for mutual wealth maximization, it doesn't in and of itself ensure that the allocation within each party to the transaction is optimal.

While it is true that it relies at least in part on outsourcing, I am unconvinced that this means that the system cannot work if the developing nations finally catch up.

It depends on the government and ideology, actually. If the government says that a flat life standard and a zero- or close-to-zero growth economy is in fact normal and everything's cool so as long as we support this position - the slowdown and convergence poses no problems. If the government and most scholars keep hawking about how growth is absolutely necessary and growth and consumption standards must be expanded by any and all means necessary (which can include everything from depressing the life standard of foreign workers diplomatically, or using war, or taking over some valuable resources to no longer be dependent on their market prices) - then I can see how this can grow into a big, big problem for which there's no adequate solution. In fact, the anger of First World populations at migrant labour and outsourcing does show that people are not going to be content with "growth with whatever means necessary" dogma, but neither (thanks to the constant bombardment from the media) will they be content with an ideology saying that growth is not the primary objective. This is the root of the problem in my view - the First World has outgrown the necessity for constant growth and any expansion of consumption; but the ideology is rigid.

[/quote]

That makes sense; the though I'm not even sure that depressing foreign worker's living standards through diplomacy or war is even contributing to growth; though it may help certain well connected producers and other special interests in the short run. More investments, not less, are better (regardless of selfish motives by corporations). Note that it's the factory workers who are leading the push for improved conditions, not the low wage agricultural workers where the conditions are least favorable to a balanced labour market.

[K. A. Pital]

Really, I doubt it's appropriate anymore to class China with much of the third world.

I said that quite a few times already, as a person who spent a while living there. China is probably low Second World right now more than Third World. They're lacking in raw product per capita, but their life standard in the cities is already second world. The village is lacking in some parts.

Yes, I see. Naturally, social and political reforms must go hand in hand with economic reforms, or they won't help the local people, that's obvious. Trade alone only provides opportunities for mutual wealth maximization, it doesn't in and of itself ensure that the allocation within each party to the transaction is optimal.

Certainly. The strength of a government also matters. If the government is heavily influenced by the private trading entities, it can create a counterbeneficial situation in the nation through corruption (the pressure put by multinational corporations on the Russian government which resulted in maimings and murders of ecological and political opposition activists is just one recent example).

That makes sense; the though I'm not even sure that depressing foreign worker's living standards through diplomacy or war is even contributing to growth; though it may help certain well connected producers and other special interests in the short run.

You're not sure that the utter ruin of Europe after the war allowed America to firmly establish itself as the world hegemon and sole Western superpower? Facing scarce competition throughout the world, America's industries grew fast and expanded their penetration of world markets.

More investments, not less, are better (regardless of selfish motives by corporations). Note that it's the factory workers who are leading the push for improved conditions, not the low wage agricultural workers where the conditions are least favorable to a balanced labour market.

I would agree. Except sometimes misallocation of investment can skew (and screw over) the entire economy. Hmm... Cuban sugarcane, perhaps, or the infamous United Fruit. In which case perhaps less is better than more

[Lord Zentei]

Hmmm. Not much disagreement on the first two points. And yes, I know that you spent time in China. How was that time, anyway?

That makes sense; the though I'm not even sure that depressing foreign worker's living standards through diplomacy or war is even contributing to growth; though it may help certain well connected producers and other special interests in the short run.

You're not sure that the utter ruin of Europe after the war allowed America to firmly establish itself as the world hegemon and sole Western superpower? Facing scarce competition throughout the world, America's industries grew fast and expanded their penetration of world markets.

Massive investments in wartime production spurred growth in America during WW2, even before they used that position to penetrate world markets. After the war, they started the Marshall plan to accelerate reconstruction (at least for those countries who wanted to become indebted to the damn dirty Yankee capitalists ). Wisely so, since impoverished people abroad can't afford as many American goods and services.

More investments, not less, are better (regardless of selfish motives by corporations). Note that it's the factory workers who are leading the push for improved conditions, not the low wage agricultural workers where the conditions are least favorable to a balanced labour market.

I would agree. Except sometimes misallocation of investment can skew (and screw over) the entire economy. Hmm... Cuban sugarcane, perhaps, or the infamous United Fruit. In which case perhaps less is better than more

LOL! I was wondering whether to mention United Fruit, but decided not to go there.

I'd like to point out though (in defense of neo-classical theory) that the irony of the situation with the United Fruit monster is: contrary to many self-professed apologists for neoclassicism, America's fruit empire was largely based on buying off government stooges in Latin America, which should have been utmost heresy for small-government/personal-liberty type models.


Anyhow, what's up with this situation? We're having a economics discussion for the first time in years, and we're agreeing too much! THIS WON'T DO AT ALL!

Perhaps we should take some minor semantic point and nit-pick it to death. <ponders>

[K. A. Pital]

Hmmm. Not much disagreement on the first two points. And yes, I know that you spent time in China. How was that time, anyway?

Pretty decent - well, more decent than my time in the USA. Perhaps I like Chinese culture more than that of the West; probably my Russian bias, just that. And of course, Lusy and Shroom were awesome, and I'd never meet them unless I went to Asia. Heh.

Massive investments in wartime production spurred growth in America during WW2, even before they used that position to penetrate world markets. After the war, they started the Marshall plan to accelerate reconstruction (at least for those countries who wanted to become indebted to the damn dirty Yankee capitalists ). Wisely so, since impoverished people abroad can't afford as many American goods and services.

However, once solid East-West competition to key American industries emerged, America started experiencing problems. Automotive is a good example. Effectively, while Europe both East and West, and Japan, were ruined, America could establish absolute and utter supremacy - the newly created industries of Europe and Japan for a long time remained indebted to America (in a whole variety of meanings of "indebted") and also heavily tied to American interests, as well. If there were other intact powerful national industries operating, the rise of American economic supremacy is not a given at all. The concept of economic hegemony does not specify how you achieve this hegemony - by outperforming competitors or by ruining them. Hence why I said ruin can be beneficial. And undeniably the incidences of ruin and poverty of many oil-producing nations affected by the so-called Dutch disease is beneficial for the hegemon as it keeps the cost of resource extraction low, but not for the oil producers' populace.

LOL! I was wondering whether to mention United Fruit, but decided not to go there. I'd like to point out though (in defense of neo-classical theory) that the irony of the situation with the United Fruit monster is: contrary to many self-professed apologists for neoclassicism, America's fruit empire was largely based on buying off government stooges in Latin America, which should have been utmost heresy for small-government/personal-liberty type models.

Hahaha. But that was exactly what I was speaking about. If the government is weak and corrupt while the private entity is strong, wealthy and influential, it can bend the government to its will. Of course, the corporation will invest, but in a highly arguable and possibly counterbeneficial manner. And even if the government is clean and the corporation is not attempting to use any corruption to their ends, international trade can itself force a nation into a counterbeneficial position, - there are types of comparative advantage which stimulate the creation of non-diversified low-tech single-good economies.

Anyhow, what's up with this situation? We're having a economics discussion for the first time in years, and we're agreeing too much! THIS WON'T DO AT ALL! Perhaps we should take some minor semantic point and nit-pick it to death. <ponders>

Dunno, sounds like fun.

[Lord Zentei]

However, once solid East-West competition to key American industries emerged, America started experiencing problems. Automotive is a good example. Effectively, while Europe both East and West, and Japan, were ruined, America could establish absolute and utter supremacy - the newly created industries of Europe and Japan for a long time remained indebted to America (in a whole variety of meanings of "indebted") and also heavily tied to American interests, as well. If there were other intact powerful national industries operating, the rise of American economic supremacy is not a given at all. The concept of economic hegemony does not specify how you achieve this hegemony - by outperforming competitors or by ruining them. Hence why I said ruin can be beneficial. And undeniably the incidences of ruin and poverty of many oil-producing nations affected by the so-called Dutch disease is beneficial for the hegemon as it keeps the cost of resource extraction low, but not for the oil producers' populace.

If you're measuring economic power in terms of relative influence, then sure: ruin abroad can obviously be beneficial, especially for vested interest groups. But long-term growth, and for the whole economy in absolute terms rather than relative? I don't think so. Artificially keeping other countries down also keeps potential gains from trade down. I suppose looking at things from the point of view of maintaining a hegemony would lead to another conclusion (which is probably why the neo-conservatives in the US are so freaked out about China and India emerging, and pushing for war all the time), but I doubt that hegemonic models are in the best interest of the average citizen. Sooner or later, such empires begin to cost more than they return, and with a whole lot of opportunity cost in the build-up to that point.

Hahaha. But that was exactly what I was speaking about. If the government is weak and corrupt while the private entity is strong, wealthy and influential, it can bend the government to its will. Of course, the corporation will invest, but in a highly arguable and possibly counterbeneficial manner. And even if the government is clean and the corporation is not attempting to use any corruption to their ends, international trade can itself force a nation into a counterbeneficial position, - there are types of comparative advantage which stimulate the creation of non-diversified low-tech single-good economies.

Heh. Well, small government proponents don't want a weak and corrupt government (unless you're talking to a shill for special interests), they want one with limited scope to its powers. But it's supposed to be competent within that scope. Rule of law is vital for proper markets to function. As for comparative advantage promoting low-tech, single-good economies; this is of course true, but provided that you've got rule of law and peace between trading partners, that doesn't matter as much. Countries becoming part of a non-nationalistic greater economic gestalt is beneficial, yes?

[K. A. Pital]

If you're measuring economic power in terms of relative influence, then sure: ruin abroad can obviously be beneficial, especially for vested interest groups. But long-term growth, and for the whole economy in absolute terms rather than relative? I don't think so. Artificially keeping other countries down also keeps potential gains from trade down. I suppose looking at things from the point of view of maintaining a hegemony would lead to another conclusion (which is probably why the neo-conservatives in the US are so freaked out about China and India emerging, and pushing for war all the time), but I doubt that hegemonic models are in the best interest of the average citizen. Sooner or later, such empires begin to cost more than they return, and with a whole lot of opportunity cost in the build-up to that point.

But you can't deny that neoconservative outlook does mesh well with economics, especially when talking about a grand national scale which usually concerns world production and consumption. If resources are finite and scarce, somebody having greater buying power or economic clout than you is actually not beneficial in the long run. Your buying power relative to this person will fall, and if it falls faster than production is expanding, or if it concerns resources for which production cannot be expanded (finite natural resources: fish, oil, agricultural crops, etc.) the competition will lead to adverse consequences for the former hegemon. That's like saying a person who used to buy 8 barrels of oil out of 10 shouldn't be upset that someone can now outcompete him and buy 5 barrels, leaving him with only 5. Thus, the concept of potential gains from competition operates well only until someone starts outcompeting you. It is good to discuss how the life standard of the First World citizens can go down a bit and their buying power can decrease a bit so that the Indians and Chinese get a bigger share of the pie. When you start walking the walk, however, a lot of people are upset about this. *laughs*

The "whole economy" should be a supranational world economy - then the equation no longer holds true because of lots of squandered opportunities. But hegemony can be beneficial for a national economy in entirety, or in the majority of sectors, and for quite a long term at that. After all, another's squandered opportunities mean the maintenance of hegemony and wealth for an entire nation. The average citizen should be likewise a world citizen, not a citizen of a particular nation. If he is an American citizen, sure as hell hegemony is beneficial for him:

The United States, with less than 5 % of the global population, uses about a quarter of the world’s fossil fuel resources—burning up nearly 25 % of the coal, 26 % of the oil, and 27 % of the world’s natural gas.

A lot of benefits if you ask me. In a intertemporal comparison, if we'd assume that other nations developed and did not allow the US to consume such a large share of resources, the US citizen would be worse off.

Heh. Well, small government proponents don't want a weak and corrupt government (unless you're talking to a shill for special interests), they want one with limited scope to its powers. But it's supposed to be competent within that scope. Rule of law is vital for proper markets to function. As for comparative advantage promoting low-tech, single-good economies; this is of course true, but provided that you've got rule of law and peace between trading partners, that doesn't matter as much. Countries becoming part of a non-nationalistic greater economic gestalt is beneficial, yes?

Low-tech single-good economies where cheap labour is locked in making whatever's needed for the hegemon today are... not that beneficial for the people working therein. Would they not rather do something else? Perhaps; but they are not allowed to, because that's not what the wealthy consumers need. Even with strict rule of law and peace between partners, I think such a situation creates fundamental injustice. Not to mention that "rule of law" and justice sometimes entirely diverge. Legislation can legalize 12-hour workdays or child labour, if need be, and the state can strictly enforce these rules, creating a "game field" for all entities foreign and domestic to play in. Doesn't mean the life standard of people won't be horrible, even the putative nation is not at war with anybody.

[Lord Zentei]

But you can't deny that neoconservative outlook does mesh well with economics, especially when talking about a grand national scale which usually concerns world production and consumption. If resources are finite and scarce, somebody having greater buying power or economic clout than you is actually not beneficial in the long run. Your buying power relative to this person will fall, and if it falls faster than production is expanding, or if it concerns resources for which production cannot be expanded (finite natural resources: fish, oil, agricultural crops, etc.) the competition will lead to adverse consequences for the former hegemon. That's like saying a person who used to buy 8 barrels of oil out of 10 shouldn't be upset that someone can now outcompete him and buy 5 barrels, leaving him with only 5. Thus, the concept of potential gains from competition operates well only until someone starts outcompeting you. It is good to discuss how the life standard of the First World citizens can go down a bit and their buying power can decrease a bit so that the Indians and Chinese get a bigger share of the pie. When you start walking the walk, however, a lot of people are upset about this. *laughs*

Well, no; that's not an inevitable outcome, since you still have comparative advantage in specific fields. Obviously certain sectors of the economy are going to do worse after their rivals gain in power, but that's not something that needs apply to all.

The "whole economy" should be a supranational world economy - then the equation no longer holds true because of lots of squandered opportunities. But hegemony can be beneficial for a national economy in entirety, or in the majority of sectors, and for quite a long term at that. After all, another's squandered opportunities mean the maintenance of hegemony and wealth for an entire nation. The average citizen should be likewise a world citizen, not a citizen of a particular nation. If he is an American citizen, sure as hell hegemony is beneficial for him:

The United States, with less than 5 % of the global population, uses about a quarter of the world’s fossil fuel resources—burning up nearly 25 % of the coal, 26 % of the oil, and 27 % of the world’s natural gas.

A lot of benefits if you ask me. In a intertemporal comparison, if we'd assume that other nations developed and did not allow the US to consume such a large share of resources, the US citizen would be worse off.

The US uses that amount of energy because their economy is the most developed, not because they are enforcing some kind of hegemonic power abroad. The oil producing countries simply sell off their oil to whoever is willing to pay for it, be it the US, China or the EU. In fact their use of military power to maintain their interests abroad have cost them vast resources for relatively little gain, especially since the end of the Cold War. Consider the wars in Iraq and Afghanistan: IIRC the opportunity cost for these endeavours has been a staggering three trillion dollars! And has the gas price been reduced? No, and if it had, then China would have benefited too without having to lift a finger. That's hardly beneficial to the US economy.

Heh. Well, small government proponents don't want a weak and corrupt government (unless you're talking to a shill for special interests), they want one with limited scope to its powers. But it's supposed to be competent within that scope. Rule of law is vital for proper markets to function. As for comparative advantage promoting low-tech, single-good economies; this is of course true, but provided that you've got rule of law and peace between trading partners, that doesn't matter as much. Countries becoming part of a non-nationalistic greater economic gestalt is beneficial, yes?

Low-tech single-good economies where cheap labour is locked in making whatever's needed for the hegemon today are... not that beneficial for the people working therein. Would they not rather do something else? Perhaps; but they are not allowed to, because that's not what the wealthy consumers need. Even with strict rule of law and peace between partners, I think such a situation creates fundamental injustice. Not to mention that "rule of law" and justice sometimes entirely diverge. Legislation can legalize 12-hour workdays or child labour, if need be, and the state can strictly enforce these rules, creating a "game field" for all entities foreign and domestic to play in. Doesn't mean the life standard of people won't be horrible, even the putative nation is not at war with anybody.

Free trade and wealth creation does not lead to a hegemony, but creates opportunities for the participants. Observe the recent UN report on their Millennium Development Goals (link):

UNITED NATIONS — Without too much fanfare, the United Nations admits in its newest report on the progress of the so-called Millennium Development Goals that wealth creation and not wealth redistribution is the main driver behind reduced levels of extreme poverty around the world.

Of course, the UN, being an organization that spends most of its time chastising rich countries for not transferring enough money to the developing world — the total last year came to $128.7 billion, the highest ever — is not quite so explicit with its admission.

In a foreword by UN Secretary General Ban Ki-moon, praise is given for the progress to the goals themselves, which world leaders meeting in 2000 set with the aim of dramatically reducing extreme poverty, hunger, illiteracy and disease around the world within 15 years.

"Already, the MDGs have helped lift millions out of poverty," he says — as if merely articulating that we would like to improve the lot of the world's poor magically realizes that desire.

But therein lies Ban's dilemma: a key part of the UN's solution at the time was to call for massive increases in overseas development aid — whereas the history of the world economy since 2000 has shown that poverty has disappeared the fastest in countries where business has expanded the most.

Hence, only later in the 72 pages of The Millennium Development Goals Report 2011 do we see that fact acknowledged with figures showing incredible reductions in poverty in Asia, where growth has skyrocketed, and dismal reductions in sub-Saharan Africa, where economies have only recently begun to pick up.

"The fastest growth and sharpest reductions in poverty continue to be found in Eastern Asia, particularly in China, where the poverty rate is expected to fall to under five per cent by 2015," says the report, released Thursday, by the UN's Economic and Social Affairs Department.

"India has also contributed to the large reduction in global poverty. In that country, poverty rates are projected to fall from 51 per cent in 1990 to about 22 per cent in 2015."

In fact, by 2005, eastern Asia — essentially China — had already exceeded the MDG target of halving the percentage of its population who live on $1.25 day, reducing the figure from 60 per cent to 16 per cent.

By contrast, sub-Saharan Africa — the world's biggest per capital recipient of overseas development aid — reduced the percentage of its people living in extreme poverty from 58 per cent to only 51 per cent between 1990 and 2005.

Still, with the pickup in business in Africa, the UN says the continent is expected to do better for its poor in the coming five years.

"Projections for sub-Saharan Africa are slightly more upbeat than previously estimated," says the report. "Based on recent economic growth performance and forecasted trends, the extreme poverty rate in the region is expected to fall below 36 per cent" by 2015.

One downside to the rapid economic development: people see jobs being created, and so are attracted to the cities, where there are now an estimated 828 million living in slums, up from 657 million in 1990.

Here again, the report, in three lines at the end of a multi-page section on ensuring environmental sustainability, says how its Human Settlements Program is urging countries to "promote access to affordable land with secure tenure and to create the conditions in which people are able to carve out and sustain a livelihood." In other words, it is advancing the concept of making everyone into a mini-capitalist.

Despite the UN's acknowledgment of the power of wealth creation, it continues to focus on encouraging cash transfers from rich to poor countries.

Indeed, on Tuesday, it released a 208-page report that contained its most expensive investment plan ever: a call for $72 trillion to be spent over 40 years so that poverty around the world can be eliminated in a "sustainable" manner, through a shift to "green" technologies in world farming. Critics noted the figure is five times the current U.S. annual gross domestic product of $14.66 trillion.

"Incremental green investment of about three per cent of world gross product (about $1.9 trillion in 2010) would be required to overcome poverty, increase food production to eradicate hunger without degrading land and water resources, and avert the climate change catastrophe," said the World Economic and Social Survey 2011, also from the Economic and Social Affairs Department.

The report added that such an investment level would need to be reached within the next few years, and that "one half of the required investments would have to be realized in developing countries." That's where the transfer comes in — some $38 trillion would flow mainly from rich countries to the developing world in the next four decades, if the UN were to get its way.

This report is a reflection of the notion of "climate debt" that many of the climate change doomsayers discuss.

Climate debt is shorthand for the trillions these people say the rich industrialized countries owe to the developing world for having "expropriated" the world's resources, starting at the Industrial Revolution in the 18th century.

That the UN is behind the idea — and has linked it to a bid to redistribute wealth from rich to poor countries — was confirmed by Ottmar Edenhofer, German co-chair of one of the working groups of the UN's data-assessing Intergovernmental Panel on Climate Change.

"If global emission rights are distributed . . . on a per-capita basis, then Africa will be the big winner, and huge amounts of money will flow there," he told Germany's NZZ Online Sunday last November. "This will have enormous implications for development policy."

He went on to indict developed countries for having industrialized, and stated that a climate change agenda should be used to effect redress for the rest of the world — rather than for upholding the integrity of the environment.

"First of all, developed countries have basically expropriated the atmosphere of the world community," he said. "But one must say clearly that we redistribute de facto the world's wealth by climate policy. Obviously, the owners of coal and oil will not be enthusiastic about this. One has to free oneself from the illusion that international climate policy is environmental policy. This has almost nothing to do with the environmental policy anymore, with problems such as deforestation or the ozone hole."

The MDG report too does not forget to chastise the Group of Eight countries, among them Canada, for not giving enough. It says they fell short by at least $18 billion in meeting aid pledges they made at the 2005 Gleneagles meeting in Scotland, and elsewhere.

The report also says that net aid to poor countries in 2010 was — at $128.7 billion — the "highest level of real aid ever recorded, and an increase of 6.5 per cent in real terms over 2009." But, of course, this was not enough since — by representing only 0.32 per cent of developed countries' combined national income, it fell far short of the UN target of 0.7 per cent.

The report praises Denmark, Luxembourg, the Netherlands, Norway and Sweden as the only countries whose aid levels exceed the 0.7 mark. Canada gets a nod for being among countries that made the largest increases to their aid budgets between 2009 and 2010. It also says that Canada was among a group that "made promises for 2010 that they kept." In light of the evidence that business has been the best bet for alleviating global poverty, maybe it's not such a good thing to be in the UN's good books.

[K. A. Pital]

Well, no; that's not an inevitable outcome, since you still have comparative advantage in specific fields. Obviously certain sectors of the economy are going to do worse after their rivals gain in power, but that's not something that needs apply to all.

Depends strictly on the resource. If there's just X apples in the garden, and the expansion of gardening is slower than the growth of non-hegemon demand - the hegemon's position will be worse off. Absolutely and without any question. It may be offset by internal distribution corrections inside the hegemonistic nation, but if we're talking about a resource the production of which is not elastic and does not expand as fast as demand, or not at all, that's what will happen. No amount of "comparative advantage" is going to help you convince the other person to start eating 2 apples again instead of the 5 he can now eat.

The US uses that amount of energy because their economy is the most developed, not because they are enforcing some kind of hegemonic power abroad. The oil producing countries simply sell off their oil to whoever is willing to pay for it, be it the US, China or the EU. In fact their use of military power to maintain their interests abroad have cost them vast resources for relatively little gain, especially since the end of the Cold War. Consider the wars in Iraq and Afghanistan: IIRC the opportunity cost for these endeavours has been a staggering three trillion dollars! And has the gas price been reduced? No, and if it had, then China would have benefited too without having to lift a finger. That's hardly beneficial to the US economy.

But I was expressing hegemony exactly in terms of buying power. The richest customer is the hegemon. He outcompetes others. But when others start outcompeting him, what then? See above. This is not a question of military power. It is only tangentially related to military power, though that's one of the ways of achieving hegemony.

The wars in Iraq, Afghanistan, etc. were clearly counterbeneficial to the US economy. The price of oil rose and additionally lots of funding was misallocated to warmaking. However, not all imperialistic wars are automatically counterbeneficial for the hegemon's entire economy. The British conquest of some colonial territories brought clear economic benefits to Britain. France's construction of the Suez Canal brought lots of benefits to Europe's advanced nations, clearly executed via imperialism. World War II and the consequences thereof were very beneficial to the entire economy of the USA - though clearly counterbeneficial to the entire world economy.

Free trade and wealth creation does not lead to a hegemony, but creates opportunities for the participants. Observe the recent UN report on their Millennium Development Goals

The UN is useful, but their rosy-eyed reports are not really all that convincing. Reduction of extreme poverty levels is bullshit, anyway (especially with the current crisis). FAO World Malnourishment numbers:

"Reduced levels of extreme poverty" seem to have been unable to substantially reduce malnourishment. Ergo, that's simply not too important a reduction. Especially as the World Bank had to revise their extreme poverty line, putting more people in it. UN self-praise can go and fuck itself.

*thinking* If the above is a tad too radically hostile to the UN report, I'll elaborate a bit. The UN report had nothing to do with the claim I made. The claim was that economies can be forced into primitive, low-cost labour producing a single good position in the world economy, and that is not beneficial for their populations. The claim did not center on large economies with diverse industries and a vast population, like China. It was specifically considering "banana republics" and smaller nations suffering from resource needle problems - for which the problem is that the world market demand for their labour is very specific and causes primitivization and degradation. And the benefits arising from that for hegemonistic nations. And to be even more precise - self-glorifying UN reports are absolutely not what I expect to be shown in a serious discussion. I've read quite a few papers on poverty and socio-economic effects of trade liberalization (like this one, for example) - what they have shown is that the results are extremely condition-dependent, country-dependent and ambigious, and TL does not automatically result in decreased poverty (no matter how much the advocates would love it to be so).

So where I seriously raise a Ricardian paradox issue with particular nations and the beneficial consequences of degradation for current hegemon(s) (not for the world economy at large), you reply to me with UN feelgood blabbering? I expected something better than that, and something more relevant to the point.