DICTATORSHIP AS AN ECONOMIC ADVANTAGE

How the Chinese Ascent Changes our Life

By Tobias Salander, historian

[This article published in: Zeit-Fragen Nr.27 7/4/2005 is translated from the German on the World Wide Web, www.zeit-fragen/ch.de.]


China is the topic of conversation everywhere. The kingdom of the middle rises to a new superpower with effects all over the world. People in Europe are affected. The German journalist Wolfgang Hirn documents this in his new book. Solutions are sought for dealing with the challenge of a state that throws 900 million people on the world market in a slaveholder manner at the lowest wages as dumping-competition. How do we wrestle against countries for dignified work and economics? Hirn’s book is a plea for an economic order that starts from equality and human dignity, exists everywhere in the world and is in force for all people because they are people.

The situation seems to be very serious. The supposed panacea, the wonder-cure often propagated like a prayer-wheel for poverty in the world, boundless growth and universal prosperity, economic liberalism known under the names “free market economy” or “globalization” is put in question not only by the notorious globalization opponents who are becoming ever-stronger worldwide but by an economist, a Nobel Prize winner, “one of the most renowned economists of all time.” Paul Samuelson, 90-year old dean of his guild, questions the theory that persisted for 200 years: the theory of free world trade.

NOBEL PRIZE WINNER URGES RENOUNCING FREE TRADE

Proposed by Adam Smith (1723-1790) and David Ricardo (1772-1823) and refined by John Stuart Mill (1806-1873), the free trade rhetoric says in a simplified way: Every country should produce the products or services that it can produce better or more inexpensively than any other country. The nations exchange these goods with each other. We all know this theory in practice has only enriched the northern hemisphere, the North and the West. We live differently today than our forefathers 150 years ago. We also know that we usually first claimed free trade for ourselves when our production sites were strong enough to enter international competition after a phase of protection by tariffs. Those who then competed against the North had the worst cards from the beginning, supplied us with resources and bought our products. Whoever rebelled was slaughtered with military force. That was the time of colonialism and imperialism. Then neo-colonialism and neo-imperialism occurred and are institutionalized today under the set of agreements of the WTO.

Despite the flaw of the system, the protectionism of the North, free trade was generally approved in our latitudes as long as it was useful to us. What happened in the world that the “grand old man” of this system before running cameras called to complete change?

IS THE FIRST WORLD COMPLETELY DE-INDUSTRIALIZED?

Anyone who wants to become immersed in the thematic should take up the book “China as Challenge. How the Chinese Rise Changes Our Life” by Wolfgang Hirn. After studying the 250 readable pages, one will read the daily papers, above all the economic section, differently and more attentively. The columns today are full of China and its corporations that buy out ever-larger western firms ever more often. The Chinese Lenovo Corporation owns IBM’s PC-division today. The US oil company Unocal that gained world (dis-) repute through the Afghanistan war could soon be part of the China National Offshore Corporation. The large US home appliances marquee Maytag could soon trade under the name Haier from China. Aleatel and Thompson are already in Chinese ownership. The list could be continued endlessly.

Hirn, an economist and editor, offers the reader a picture of contemporary China with its history and includes critical questions. He quotes memorable remarks of Paul Samuelson. “What if one country can make nearly everything at unbeatable prices? This was not anticipated in the beautiful self-contained world of free trade theory. Paul Samuelson pointed to this weak spot by referring to the example of China. China can increasingly produce everything cheaper – from toys to computers.” (P.88)

Hirn shows how China’s rise to the “omnipotent production nation” leads to an increasing de-industrialization of former industrial states and asks: “Will history repeat itself? Earlier owing to the first industrial revolution, England and the rest of Europe and the US with a certain temporal delay rose to economic superpowers while the other non-European countries – including China and India – were marked by a dramatic decline.” (P.88)

He concludes: “The opposite seems to be happening now during the new industrial revolution of the 21st century. This time China and India are winning. The losers will be Europe and the US. The 150-year western dominance is obviously coming to its end.” (P.88)

THE PROFIT MAXIMIZATION CIRCUS MOVES

Hirn opens the eyes of us westerners to the revolutionary consequences of free trade with a nation like China. He never represents China as a “yellow peril” or decays to the TINA-syndrome (“There Is No Alternative”), a roguish trick with which we people should become accustomed to the supposed inevitability of globalization. He is swept away by the fascination of the impressive growth figures of the Chinese economy. However he ignores that this is only possible because people must live in slave-like conditions and work at the absolutely lowest wages. He shows bluntly how capital moves freely where workers are cheapest. He speaks of the Japanese firms that closed their factories in Mexico because the Mexican workers with their $300 monthly salary earn two to three times as much as the Chinese army of millions. However the profit maximization circus is moving within China itself. Since the coastal region has already become too expensive, many firms migrate to the interior of the country where people work for half of the already very low wages of coastal dwellers.

The environment is burdened beyond all measure with pollutants just like the two American coasts today. This dictatorship stands in free competition with the national economies of the old world where unions gained rights by fighting for decades. Today these rights are subsumed as a positional disadvantage. Thus whoever wants free world trade with a dictatorship and its army of slaves of almost a billion persons will also support slave labor at home. Whoever wants profit for the sake of profit does not prune for democracy, human rights and human dignity at home.

FAIR WORLD TRADE

When even a Paul Samuelson calls to complete change, which can only mean protecting one’s own economy where necessary while pursuing trade where desirable for both sides. However this can only happen on the ground of human dignity. Europe cannot abandon its hard-fought labor rights unceremoniously to compete with pitiable slave labor. But it also may not be that the North shirks its historical responsibility and its guilt in past decades and centuries. What is lined up is a reorganization of world trade, a dissolution of the unfair WTO with all its instruments of exploitation like GATS, TRIPS and so on, a strengthening of the idea of human rights and human dignity worldwide in China, Europe and America. What did Maria Mies say once? Neoliberalism means war, war against the outside and in the interior of countries, war of those above against the great majority of the population below. Still this war is man-made and can be prevented from below.

THE RESPONSIBILITY OF THE FIRST WORLD

China is well on the way to the 80:20 percent society as Hirn demonstrates clearly. This is unjust in China as it is unjust in the North of the planet. However 80:20 percent societies are not natural laws but were cooked up in a dubious conference of the elites of this planet like the madness of heavy debts of the public treasury and the compound interest problem.

The large majority of people in the first world are among the best educated on this earth, well fed, medically well-provided and favored for happiness. It could be their sacred duty to assure that human dignity is not trampled on either in the first or the third world, in Switzerland or in China. A protective tariff policy with a sense of distance involves human dignity and justice, not nationalism, war and egoism. This policy also implies concern and reflection about the others, the less favored. In the heart of every individual person, there is enough room for his fellow-creatures. True happiness first appears when the neighbor next door or on the other side of the globe can also live in peace. The Swiss are called to organize the economy in Europe more justly.
* Wolfgang Hirn, Herausforderung China. How the Chinese Rise Changes our Life, Frankfurt 2005