A Neoclassical Solution For China

The Party was challenged to open up to Western market liberalism, and so it did. In the 1980s, a flurry of advisers and counselors came from Ronald Reagan's America and Margaret Thatcher's Britain to advise China on reforms. Liberalism seemed to be the answer, which perfectly combined with the Party's then-extreme weakness.

Today, things are very different. In the past decades, the Party has been getting stronger and more confident with its successes. Today, the Party and its structure play an important role. So it seems natural that the way forward is to strengthen this winning structure.

The communiqué announced plans 1.) to bolster the Party's organization, 2) to improve the laws and norms regulating Party life, and 3) to stress the obligation for Party and non-Party members to study relevant documents. The goal is to create a highly efficient and socially solid body.

It is not a new recipe. After over a century of Western cultural influence, from the end of the Qing empire in 1911 to the present, China seems to want to return to find new inspiration in its origins.

The structural strengthening of the state that began around the 7th-6th century BC brought about the eventual unification by the State of Qin.

It was achieved, historians tell us, precisely because of the consolidation of a bureaucratic apparatus able to manage wealth, assets, materials and human resources with increasing efficiency. Today, China seems set on a similar track.

The two great inspirers of this process were the philosopher Mozi, who first theorized the bureaucratic state in the 4th century, and Hanfeizi, who inspired the first emperor, Qin Shi Huangdi.

Hanfeizi underlined that the state had to be guided through laws and norms. These two elements are present in today's CPC communiqué, plus an emphasis on the value of study, which seems to reference the Confucian tradition.

It is a“neoclassical” project that is very different from what happens in the rest of the world. Its contours are not precise and we must see how it goes.

Modern Western states came into being in the 17th and 18th centuries with the inspiration of the Chinese bureaucracy. These ideas inspired projects to set up a system of civil servants in France, England and from there on throughout Europe and the world. The bureaucracy helped the development of the market by taking away the power of the old aristocracy.

The CPC communiqué goes beyond that. It wants a hyper-bureaucratized state that uses laws and has everybody study and learn. It differs from the old Communist Party and the old autocratic powers centered on one man giving orders left and right.

Instead, it is a power of offices supposed to function according to laws with people who learn to follow the rules and patterns. Here, the role of the market is essential but unclear. In the ancient Chinese bureaucratic state, the market acted as a transmission channel but did not have the central function it has in capitalism.

The Chinese historically know about the bureaucratic state, whereas they don't know about the free market or democracy, which is not in their cultural DNA.

Thus the bureaucratic state is easier to apply. However, it does not rule out democracy, although in the past when mentioned it was very different than in the West.

The hyper-bureaucratized state exploded in the Qin state with the first emperor because too much bureaucracy and control burst the state itself.

Today, we are still far from thinking about an explosion because we are just at the beginning of this project. Moreover, the bureaucracy in the past did not have all the technology that is available now.

Today, thousands of control and communication tools make everything much more effective. There are almost 100 million Party members, one Party member on average for every ten people, excluding children. It's a gigantic apparatus that could be very efficient or extremely hard to manage.

This bureaucratic organization aims to bring uniformity to people toward the top – President Xi Jinping. In some ways, it prepares China for eventual sieges but also to face a potentially weaker world. If China is strengthened internally, it can better withstand assaults from outside or advance with possibly much more effectiveness.

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It can work both defensively and offensively, as the bureaucratic state of the 3rd-4th century BC did. It is a long-term project that will not be fully implemented in a couple of years. The 1978 reforms started moving the Chinese economy only a decade after their official launch.

Still, there is a significant problem addressed by Mozi and Hanfeizi in the 3rd century BC – how do you motivate the bureaucrats? They argued that people needed the“two levers”: greed and fear of punishment – the possibility of being rewarded and the fear of retribution. It's unclear how modern Chinese officials will implement this.

Deng's reforms worked because they turned all Chinese bureaucrats into entrepreneurs, i.e. entrepreneurs for their own offices, regions, municipalities and cities, developing businesses and taking bribes in the process.

The system imploded because excessive corruption killed the actual business. Xi's anti-corruption drive planned to eradicate it and it essentially has. But so far, the entrepreneurs and officials are not enthusiastic, and there are no new market rules.

Many Chinese pundits argue that these should start with the complete legal protection of property rights, which would limit de facto Party powers. Here lies the contradiction: to bolster the Party's control, the Party should protect property rights, which would restrict Party powers.

The contradiction is solved in capitalist countries by admitting a division of powers. It's not clear whether China's Party is willing to go that far.

Moreover, bureaucrats now fear that if they make decisions, they can make mistakes, so they don't decide. It is unclear what incentive will be given to bureaucrats who lost so much power and money in the anti-corruption drive.

In any case, no other country has equally ambitious projects, which may give China an edge.

This article first appeared on Appia Institute and is republished with kind permission. Read the original here .

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