China’s “Power Market” Political Economy

A Friedrich von Hayek influenced Chinese journalist Yang Jisheng recently discussed about China’s history and current political economy.

Here’s Austrian economist Joseph Salerno at the Mises Blog

In an interview with the Wall Street Journal Mr Yang now reveals that he was greatly influenced by Friedrich A. Hayek’s classic work The Road to Serfdom , a heavily redacted version of which was translated into Chinese in 1997. Indeed Hayek had presciently written in this book, “In a country where the sole employer is the state, opposition means death by slow starvation.” Not only did Hayek’s book provide Mr. Yang with an explanation of the tragic events of his youth, it also explains the current Chinese system, which he maintains, has been completely misunderstood. The Wall Street Journal summarized Mr. Yang’s position as follows:

“China’s economy is not what [Party leaders] claim as the ‘socialist-market economy,’ ” he says. “It’s a ‘power-market’ economy.”

What does that mean?

“It means the market is controlled by the power. . . . For example, the land: Any permit to enter any sector, to do any business has to be approved by the government. Even local government, down to the county level. So every county operates like an enterprise, a company. The party secretary of the county is the CEO, the president.”

Put another way, the conventional notion that the modern Chinese system combines political authoritarianism with economic liberalism is mistaken: A more accurate description of the recipe is dictatorship and cronyism, with the results showing up in rampant corruption, environmental degradation and wide inequalities between the politically well-connected and everyone else. “There are two major forms of hatred” in China today, Mr. Yang explains. “Hatred toward the rich; hatred toward the powerful, the officials.” As often as not they are one and the same.

(bold mine)

Well, “a more accurate description of the recipe is dictatorship and cronyism” is really about fascism. And this has not just been about China.

Fascism, as traditional conservative and an outspoken critic of the Roosevelt administration's domestic and foreign policy decision, John Thomas Flynn wrote, is

a system of social organization in which the political state is a dictatorship supported by a political elite and in which the economic society is an autarchic capitalism, enclosed and planned, in which the government assumes responsibility for creating adequate purchasing power through the instrumentality of national debt and in which militarism is adopted as a great economic project for creating work as well as a great romantic project in the service of the imperialist state.

(bold mine)

Fascism via "instrumentality of national debt" or vastly increased public non-military spending as evident in ballooning budget deficits, and militarism's "great romantic project" such as "to defend the territory from bullies". 

Sounds familiar?