As the US stock market was dropping 1,000 points on Monday morning, US commentators were pinning the blame on China. The Chinese economy, they said, was slowing down: what had been the “engine” of worldwide economic expansion was running out of fuel. The clear implication was that China’s rulers were somehow responsible for the sudden evaporation of over $2 trillion in assets over three days of the market plunge.
This focus on China as the foreign culprit behind America’s economic woes is being broadcast far and wide by Donald Trump, the mercurial demagogue who has put foreigner-bashing at the center of the political discourse. China’s rulers are “smart,” he says, while ours are “dumb.” Chinese leader Xi Jinping is slated to visit the United States and The Donald doesn’t want him to be feted at a fancy White House dinner: instead, he wants to feed him a Big Mac from McDonald’s because China has “sucked all of our jobs.”
Our jobs. Our inflated stock market prices. An American politician can’t lose by appealing to our sense of entitlement, and Trump certainly knows how to play that tune. Americans are never to blame for the consequences of their own folly: it’s always somebody else’s fault. That’s why the need for a scapegoat is a staple of American politics: today it’s the Mexicans and the Chinese, during the cold war era it was the Russians and the Japanese. Remember when it was cheap Japanese goods that were “stealing” our markets?
The portrayal of China as this sleeping giant that is now awakening to take over the world – and take our jobs – is, like most such conceptions, a total delusion. The Peoples Republic of China is weak in almost every sense: politically, economically, and militarily, the PRC is a paper tiger – as Mao Tse-tung liked to characterize the US – and its rulers are sitting atop a volcano.
Yes, China has made great strides since the dark days of the Cultural Revolution and the Mao era: having abandoned communism and gone in for a form of state capitalism, the leaders of the no-longer-Communist Party of China have unleashed the natural entrepreneurial spirit of their people. In doing so, however, they have also unleashed the “creative destruction” that comes with capitalism – and, perhaps, they have also ensured their own destruction.
Of course the Chinese commies haven’t instituted laissez-faire: their “capitalism” resembles our own times ten, i.e., it is what we call crony-capitalism. It is driven, in short, by politics, not by the spontaneous order of the market: it is monopolistic, not competitive. The big industries are controlled by China’s version of the One Percent: the “princelings,” the children of the Communist Party elite who are flaunting their wealth and privileges in a society still officially committed to the egalitarianism of the Mao era. This is a surefire recipe for social unrest, and in spite of the Communist Party’s tight rein on the media we are beginning to see evidence of social turmoil boiling up to the surface. Although China is regularly characterized as a “totalitarian” state by human rights activists, there are an estimated 90,000 “mass incidents” – raucous protests that often turn into riots – each year.
The reasons for this are as multitudinous as the local issues that have been vexing China’s lower and middle classes – housing, land issues, official corruption, rising crime rates – but all are related to the system China’s rulers have constructed in the years after the fall of the “Gang of Four” and the discrediting of Maoist ultra-leftism. It is the same system that exists in our own country magnified a hundred times: state-privileged politically-driven capitalism.
Under this system, the Communist Party elite has “privatized” a large percentage of the means of production and turned it over to … themselves. Utilizing the Party’s control of the economy, these state-controlled (and some ostensibly “private”) companies dominate the commanding heights of the Chinese economy. As a corollary development, economic liberalization has created burgeoning upper and middle class sectors with buying power far beyond the reach of China’s rural peasant masses.
In short, economic inequality has skyrocketed, and, in the context of China’s history, this represents a dire threat to the political class: after all, Maoism is still the official ideology of the Chinese Communist Party, albeit greatly modified in the years since Mao’s death. The distance between official ideals and everyday reality grows ever greater, and this is a major problem for China’s rulers as protests become more frequent and more violent.
While China’s ruling elite presents a unified face to the world, the Communist Party – like all parties everywhere – is rife with factionalism, and the effects of behind-the-scenes maneuvering is exacerbated by the country’s legendary opacity. One never knows who or what is on top in the upper reaches of the Chinese elite, and the result is uncertainty and instability.
This inherent instability is enhanced by a systemic problem. In imitating Western-style capitalism, the Chinese have combined Keynesian pump-priming – flooding the country with freshly-printed money – with Maoist-style central planning. It is Krugmanism combined with the old Soviet-type Five Year Plan. Certain favored industries are targeted for growth, with quotas set and inevitably fulfilled, and this has resulted in the creation of a series of bubbles – in real estate, investment, and credit – that are fated to pop.
The portrayal of China as a giant – either as a benign one, in the form of an economic powerhouse that will provide a ready market for Western exports, or as an economic and military threat that is taking “our jobs” and potentially replacing the US as the dominant military power – is in itself a bubble, a myth on the brink of exploding. In reality, the Peoples Republic is a makeshift construction with a very fragile foundation, one that could give way at any time. And there is plenty of seismic movement beneath the surface of Chinese society: a rising middle class whose expectations cannot be met, a volatile peasant mass, corruption on such a scale that it has become the norm, and a rising nationalism that the Communist Party elite fears even as it tries to manipulate it for its own purposes.
Too big to control, too volatile to be predictable, and too full of contradictions to achieve stability, China is a society that is on the edge of coming completely unglued. So the Donald Trumps of this world are wrong, as usual, in conjuring a vision of the Yellow Peril. China isn’t eating our lunch: indeed, their own “iron rice bowl” – the old Maoist guarantee of full employment and state support for the masses – is in the process of being melted down. Which means we might expect a demagogue to arise out of the ensuing chaos, one who attacks “foreign devils,” appeals to populist prejudices, and aspires to “Make China Great Again” – a Chinese version of Donald Trump.
Trump’s bombastic anti-Chinese rhetoric – China “will bring us down,” be bloviates – is ironic to the nth degree. Appealing to the typically American conceit that nothing that ever happens to us is our own fault, Trump’s scapegoating is a reflection of widespread economic ignorance. For the reality is that the policies of our own rulers limn those of the Chinese: pump-priming the currency, flooding the US economy with money, and creating massive bubbles is something they learned from us. And those policies are having the same effect here as they are having in China.
This piles irony on top of irony, for it provides more grist for the Trumpian mill of scapegoating, economic protectionism, and nonsensical denunciations of the “Yellow Peril.” Yes, the wheel turns around and around, a veritable perpetual motion machine of prejudice, ignorance, and malice.
The program of Trumpismo – trade barriers, foreigner-bashing, and the myth of a Lost Greatness – is a recipe for war. If goods – and people – don’t cross borders, then armies soon will. If “foreigners” are blamed for America’s problems, then it won’t be long before we’re taking up arms against them. As the “Make America Great Again” crowd grows in strength, a country that measures “greatness” in terms of military strength is bound to turn to war as a panacea for all its ills.
NOTES IN THE MARGIN
You can check out my Twitter feed by going here. But please note that my tweets are sometimes deliberately provocative, often made in jest, and largely consist of me thinking out loud.
I’ve written a couple of books, which you might want to peruse. Here is the link for buying the second edition of my 1993 book, Reclaiming the American Right: The Lost Legacy of the Conservative Movement, with an Introduction by Prof. George W. Carey, a Foreword by Patrick J. Buchanan, and critical essays by Scott Richert and David Gordon (ISI Books, 2008).
You can buy An Enemy of the State: The Life of Murray N. Rothbard (Prometheus Books, 2000), my biography of the great libertarian thinker, here.