Thursday, Nov 9, 2006
Socialism and the Free Market
When mentioned to most Americans, communism carries a fear-mongering McCarthyism sentiment. The idea of Stalin's socialism in one country is conjured, in the modern world the only remotely communist country without a free-market system is Cuba. So, commonly accepted truths towards socialist economic policy are quite antithesis of actual national policies. Isolationism caused socialist countries to adopt modern free market systems which are making these states the wealthiest in the world.
Socialism redefines free market from a traditional sense, which indicates the exploitation of the world's workers, into a purely Keynesian approach, which conflicts with the free market of the past. In socialist free market system the government does play a major role, thus the Keynesian approach, but also allows for the unions and foreign investors to trade freely in and out of the state in question. This, the Keynesian approach, is widely considered to be the most efficient approach, even in western capitalist nations. Need for such a market approach was the result of several of Stalin's overthrowing of Lenin's new economic policy, Lenin's policy promoted trade with western powers, and Mao's great leap forward. In promoting the great leap forward Mao Zedong argued that the best way to finance industrialization was for the Government to take control of agriculture, thereby establishing a monopoly over grain distribution and supply. This would allow the State to buy at a low price and sell much higher, thus raising the capital necessary for the industrialization of the country. These policies are the opposition to Cuba and Vietnam's policies which supported the more free collectivization of agriculture, though these would not be the antithesis of Soviet and Chinese policy, in that the collectives were not entirely free to run entirely as they pleased especially in initiation of trade with other countries. These failed policies required advancements in, as Chairman Mao stated, "great leaps and bounds," which necessitated funds and technology that did not exist in these states. Because of these policies' failure all of these states, except the USSR, were experiencing horrible economic conditions without the opportunity of foreign states investing or lending them money.
Earlier failures necessitated a system that would allow socialist states to take capital and technology from western nations, that is at the expense of labor power and, to an extent, self-sufficiency. Ideas to execute such were Doi Moi, socialism with Chinese traits and perestroika. Notably missing from that list is action from Cuba, who continued with their semi-successful policies of the past, since some major countries already have imposed sanctions against Cuba. Doi Moi modernized Vietnam by allowing South Korea to invest heavily in the country, creating a huge economy. In a traditional free market this would have the possibility to destroy the economy, but in the almost Keynesian economic system of Vietnam this is avoided by allowing greater government control over foreign investment. Promotion of organized labor and open trade in China and Vietnam allows them to have the highest GDP growth rate in the world [considering industrial countries]; 10.2 in China and 8.5 in Vietnam.
It is speculated that the intense growth rates in Vietnam and China will cause a depression, but this idea is offset by the states’ control over inflation. This enables the state to force a correlation between inflation and GDP, so that any depression or recession can be extremely minimized, if not avoided. The intended end result of Socialism with Chinese Traits and Doi Moi are to establish the industry required to form an egalatrian state. That would indicate an improvement in working conditions as a result as well. Improved working conditions will be formed by implementing full union buy-outs of factories, when enough labor has been sold for the people, with the government's help, to buy the factories. A great effect this policy would have is control over trade partners. The foriegn investers ally themselves with China economically, disobeying one of Machiavelli's primary rules: do not ally yourselves with states more powerful than your own. All of the aforementioned effects culminate into one thing: power; China will become, and to an extant has become, a major world player in contrast to a victim of imperialism, as the only comperable country, India, has become.
Earlier isolationism cause socialist countries to adopt a more free market approach to economics, from this they are becoming world leaders. The new socialist economic policies have also proven the common conceptions of communisms to be superstitions and, through this, the conceptions of politics as a whole. This is the unveiling of the imperialists and the hegemony they create to maintain what power they already have.
Comments
Page
1
« prev
|
next »
Posted Nov 10, 2006 4:24 pm PT
glad you liked it.....hope my english teacher liked it as much as you and Jerico6 did
Posted Nov 10, 2006 4:44 pm PT
interesting
Posted Nov 11, 2006 3:28 pm PT
That was very interesting, those kind of actions can help many developing countries who are usually exploited by western and more wealthy countries for all their worth and labour. I very much like the notion of GDP linked to inflation, this would then avoid market crashes like seen in UK and USA. Excellent blog, phragit, that must've been a lot of research plonked into your head 
Posted Nov 12, 2006 12:39 am PT
Interesting read Phrag, I took a class earlier this year on Business Economics so a lot of your points came back to me like Deja Vu.
Posted Nov 15, 2006 9:50 am PT
The Keynesian approach is considered to be the more efficient approach? Maybe to anyone who was born after 1979. Those who have the hard experience of what Keynesian economics led to through the late 60s and all through the 70s can't help but think otherwise.
Posted Dec 19, 2006 12:19 am PT
Yeah, I would have to disagree with the notion that a command economy is the most efficient. You site China and Vietnam as examples of how a Keynesian approach is the most successful economic model. However, I believe there are significant problems in each of these countries that show the failings of supreme governmental control over the economy.
At first glance, things in China appear to be going very well. For a little under a decade, they've been posting economic growth rates of around 10%, a figure impressive for any economy. Look a little deeper and it looks even better. The illegal pegging of the yuan to the dollar has allowed China to maximize its trade surplus. The coastal cities are growing at an incredible rate, and foreign investment pours in. But if you take a truly in-depth look, you begin to see contradictions in China's growth spurt. The inconvenient truth for communists is that China's economic growth began only after economic controls were LOOSENED under Deng Xiaopang. While Mao's disastrous former policies could hardly be considered Keynesian, neither can the current policies of the Chinese government. Increasingly, when given the choice between communist ideals and foreign investment, the Party is choosing investment. This is a good thing for China, but a bad thing for the Party's power. As China's cities become more internationally linked, the government finds it harder and harder to exercise total control, and impossible to sustain Communist ideals. Already, the economic center of Hong Kong is essentially autonomous. Furthermore, it's fairly generally assumed that healthy economic growth increases the size of the middle class. It's also assumed that the middle class is the least likely to tolerate totalitarian controls on their lives. Therefore, as China's middle class grows, there will be more and more political opposition to the policies of the Communist Party in China's urban areas. At best, Doi Moi is as communists portray it: a philosophy that will allow economic growth and national identity. But most realists see it for what it is: a significant, if subtle, admission that Communism has little place in the China of the future.
China has other problems. If you read the news, you'll notice that there have been a large number of riots in China over the past year. Several thousand, in fact. If China is progressing in such an egalitarian fashion, why are these riots occuring? And that's precisely the point. China's economic growth is not equally shared in the least. Personal wealth is being amassed much as it is in the west. And the peasants, still the majority of China's population, are being left behind. If you don't believe me, then read an account of what life is like in the interior villages of China. The continued poverty of the VAST majority of China while a smaller minority recieves vast benefits from an economic explosion. China faces a conundrum: returning to egalitarian policies will cripple their economic growth; ignoring the demands of the peasantry will result in increased unrest which may eventually unseat the ruling government. Further evidence that egalitarianism has been sacrificed on the altar of economic growth.
There are also reasons to doubt that China's economic growth will actually continue. Part of this fear is inflation: despite the government's control over interest rates, the massive influx of foreign capital is making it increasingly difficult for the government to manage this problem through macroeconomics. But there is a larger problem that you didn't mention: the fact that China's economy needs a massive amount of fuel. China is consuming oil and other resources at an incredible rate. It has tried to pre-empt a potential shortage by increasing trade with Africa and South America, but if China's economic growth continues at this rate, even this will not be enough. Even a minor/temporary shortage of petroleum would cause the Chinese economy economy to shudder; a longer or more massive shortage would result in an economic depression. These are all potentialites. The simple fact is that nobody knows. John Kenneth Galbraith once said, "In economics, the majority are always wrong."
Economics is such an inexact science that even the best projections are educated guesses with a capital "G". Nobody knows whether China will eventually become the world's supreme economic power. There is a maxim in economics, though: Stability is prosperity. And given the contradictions in China's society and economy, it's unlikely they can maintain stability much longer.
Either way, just keep in mind that there is no communist economy in history that produced healthy and sustainable economic growth comparable to that of a free market one. China seems like the exception until you realize the truth: China is not Communist. Underneath its propaganda, 5 year plans, and Harmonious Society, the coastal cities, the motor of the Chinese economic growth, are as greedy, corporate, liberally run, and free market oriented as the great cities of the West. Whether you think that's a good thing or a bad thing for China depends on your economic philosophy.
At first glance, things in China appear to be going very well. For a little under a decade, they've been posting economic growth rates of around 10%, a figure impressive for any economy. Look a little deeper and it looks even better. The illegal pegging of the yuan to the dollar has allowed China to maximize its trade surplus. The coastal cities are growing at an incredible rate, and foreign investment pours in. But if you take a truly in-depth look, you begin to see contradictions in China's growth spurt. The inconvenient truth for communists is that China's economic growth began only after economic controls were LOOSENED under Deng Xiaopang. While Mao's disastrous former policies could hardly be considered Keynesian, neither can the current policies of the Chinese government. Increasingly, when given the choice between communist ideals and foreign investment, the Party is choosing investment. This is a good thing for China, but a bad thing for the Party's power. As China's cities become more internationally linked, the government finds it harder and harder to exercise total control, and impossible to sustain Communist ideals. Already, the economic center of Hong Kong is essentially autonomous. Furthermore, it's fairly generally assumed that healthy economic growth increases the size of the middle class. It's also assumed that the middle class is the least likely to tolerate totalitarian controls on their lives. Therefore, as China's middle class grows, there will be more and more political opposition to the policies of the Communist Party in China's urban areas. At best, Doi Moi is as communists portray it: a philosophy that will allow economic growth and national identity. But most realists see it for what it is: a significant, if subtle, admission that Communism has little place in the China of the future.
China has other problems. If you read the news, you'll notice that there have been a large number of riots in China over the past year. Several thousand, in fact. If China is progressing in such an egalitarian fashion, why are these riots occuring? And that's precisely the point. China's economic growth is not equally shared in the least. Personal wealth is being amassed much as it is in the west. And the peasants, still the majority of China's population, are being left behind. If you don't believe me, then read an account of what life is like in the interior villages of China. The continued poverty of the VAST majority of China while a smaller minority recieves vast benefits from an economic explosion. China faces a conundrum: returning to egalitarian policies will cripple their economic growth; ignoring the demands of the peasantry will result in increased unrest which may eventually unseat the ruling government. Further evidence that egalitarianism has been sacrificed on the altar of economic growth.
There are also reasons to doubt that China's economic growth will actually continue. Part of this fear is inflation: despite the government's control over interest rates, the massive influx of foreign capital is making it increasingly difficult for the government to manage this problem through macroeconomics. But there is a larger problem that you didn't mention: the fact that China's economy needs a massive amount of fuel. China is consuming oil and other resources at an incredible rate. It has tried to pre-empt a potential shortage by increasing trade with Africa and South America, but if China's economic growth continues at this rate, even this will not be enough. Even a minor/temporary shortage of petroleum would cause the Chinese economy economy to shudder; a longer or more massive shortage would result in an economic depression. These are all potentialites. The simple fact is that nobody knows. John Kenneth Galbraith once said, "In economics, the majority are always wrong."
Economics is such an inexact science that even the best projections are educated guesses with a capital "G". Nobody knows whether China will eventually become the world's supreme economic power. There is a maxim in economics, though: Stability is prosperity. And given the contradictions in China's society and economy, it's unlikely they can maintain stability much longer.
Either way, just keep in mind that there is no communist economy in history that produced healthy and sustainable economic growth comparable to that of a free market one. China seems like the exception until you realize the truth: China is not Communist. Underneath its propaganda, 5 year plans, and Harmonious Society, the coastal cities, the motor of the Chinese economic growth, are as greedy, corporate, liberally run, and free market oriented as the great cities of the West. Whether you think that's a good thing or a bad thing for China depends on your economic philosophy.
Posted Jan 8, 2007 3:52 pm PT
A very rousing post there, Electric_Shadow. Superb read. I never knew China was trying to break out of communism, but it's increasily apparent how badly the poor peasants are being treated. There's a difference between theory and practicality, and so communism is probably not the most practical in terms of economics, i guess from the evidence.
Posted Jan 9, 2007 9:56 pm PT
In regards to China's communist party, it is Maoist; Maoism is quite unpopular around the world, except in China.
China is not progressing in an egalatarian fashion, it is simulating the capitalist gowth period.
In regards to China's costal cities' greed, it is the natural reaction to years of faid Maoist Agrarian policy which have diminished the cities' power in government.
Regarding gasoline: they are become a much larger trader with Iran, especially after Israel threatened a nuclear strike.
China is not progressing in an egalatarian fashion, it is simulating the capitalist gowth period.
In regards to China's costal cities' greed, it is the natural reaction to years of faid Maoist Agrarian policy which have diminished the cities' power in government.
Regarding gasoline: they are become a much larger trader with Iran, especially after Israel threatened a nuclear strike.
Posted Jan 12, 2007 8:46 pm PT
Page
1
« prev
|
next »
Friends
My Friends
Nameless3