China: Looks Like Capitalism to the Naked Eye, But It’s Not


Economist James Galbraith, Lloyd M. Bentsen Jr. Chair at UT Austin, has written a brilliant review of two books — the first The End of Poverty by Jeffrey Sachs and the second The Global Class War by Jeff Faux — in the latest American Prospect.
Read the entire thing — very well worth the education about the Sachs global development juggernaut as well as the contours of his personality but also about economic development trends on this continent via Jeff Faux.

I found this bit on China particularly intriguing, revealing more about Galbraith I think than either Faux or Sachs:

China has adopted markets without capitalism; it has not had broadly open, speculative markets for capital assets and land.
The result is that you usually have to make something in order to get rich. So companies produce and produce, flood the markets with goods, accept low profit margins, improve quality, and hope to strike gold by exporting to the West.
If they have losses, as they often do, these may be covered by borrowing from China’s rotten, state-owned banks, protected by capital control. Workers thrive on the glutted market for goods. Meanwhile, the richer local governments finance themselves with land rent and spend the proceeds on infrastructure at an incredible pace.
The system looks like capitalism to the naked eye. But it is not capitalism; it’s an outgrowth of what was there before. What was communism has become, one might almost say, Galbraithian — private affluence, with much less public squalor than one finds elsewhere in the Third World.
In an important closing, Faux realizes that North American integration is irreversible. He therefore argues that North America should now aim for a deeper union — something approaching the European model. He looks at modern Europe through rose-colored glasses, seeing there a bastion of social democracy and solidarity that the average resident of, say, the Paris suburbs would not recognize.
But the point is correct: A United States of North America, with its openness to expansionary budgets and easy money, and with 69 million Mexican voters, would very likely be more democratic and more prosperous than the present-day European Union, and also not more corrupt than the current crowd in Washington, D.C.
Moreover, two aspects of the European model — free migration and a common currency — would help solve many of Mexico’s deepest development problems, as the euro and low interest rates have done, remarkably quickly, for Spain.
Of course, to go that far, one would have to protect the interests and address the sensibilities of our neighbors to the north. And to do that, I have long favored naming the new North American money along the lines chosen in Europe. With special deference to our friends in Quebec, it should be called the Amer.

Interesting views. I’m just back from Orlando where I had a terrific dinner discussion last night regarding America’s stakes in getting its global portfolio in better shape than the last four years. We discussed China, Iraq, Iran, Israel, us, and just about everything else with a very informed group comprising the Orlando Area Committee on Foreign Relations.
Now back to the battle front. . .
— Steve Clemons