News & Analysis
Chinese Statists = American Ones?
China's 'State Capitalism' Sparks a Global Backlash ... Since the end of the Cold War, the world's powers have generally agreed on the wisdom of letting market competition—more than government planning—shape economic outcomes. China's national economic strategy is disrupting that consensus, and a look at the ascent of solar-energy magnate Zhu Gongshan explains why. A shortage of polycrystalline silicon—the main raw material for solar panels—was threatening China's burgeoning solar-energy industry in 2007. Polysilicon prices soared, hitting $450 a kilogram in 2008, up tenfold in a year. Foreign companies dominated production and were passing those high costs onto China. Beijing's response was swift: development of domestic polysilicon supplies was declared a national priority ... Today, China makes about a quarter of the world's polysilicon and controls roughly half the global market for finished solar-power equipment. – Wall Street Journal
Dominant social theme: China derives too many advantages from state-controlled capitalism. The West must reluctantly adapt.
Free-market analysis: We have been covering what we believe is essentially the demise of China as it currently exists because we think inflation is raging virtually out-of-control in that big country. We know some (or even many) may disagree with our perspective and certainly the timeline is always in doubt. The Chinese economy presumably could collapse tomorrow or continue onwards with increasing success for another 10 or 20 years. In any event, given what we perceive on the horizon, stories like the one above are puzzling to us. For us, there is increasingly less difference between how Western business operates and how business in China takes place. The "advantage" of Chinese state capitalism as expressed in the excerpt above is increasingly insignificant as industrial methodologies converge.
The so-called differences between Chinese and Western business is increasingly a kind of dominant social theme in our view, one intended to present the perspective that private-market capitalism is under attack from a more brutal form of "state"-capitalism. The perception, then, is that the West's laissez faire approach to private enterprise is endangered and must be protected. Westerners, in other words, should appreciate what they have. This is in fact an effort to defuse criticism that the West is becoming too authoritarian and too statist. Look there – we are told – China is far worse, though perhaps more efficient. Here in the West we are devoted to our freedoms and will never go down the Chinese road.
We have covered this particular meme before in several articles, noting that promotion has been enshrined in books and articles that postulate the 21st century will focus on a confrontation between these two kinds of capitalism as operated by the West and China. Within this paradigm, the West's market capitalism is to be presented as a precious and endangered commodity compared with the brutal efficacy of the Chinese state model. We have also pointed out that nothing could probably be further from the truth. If the pioneer of state capitalism was Germany, then the inheritor of the German model has certainly been the larger West, including America and the EU. When one examines how capitalism works in the West in the 21st century, one is struck by the amount of government involvement and general "bigness." This is in no way dissimilar to the Chinese model.
How has corporatism evolved in the West? In the past, we've discussed the idea that the corporation itself is an artificially manufactured entity and that, absent the current statist judicial system, corporations would not exist. What would be in place instead would be alliances of smaller companies (owned outright by individuals or partners for the most part), as well as joint-ventures that would do the work now taking place under one roof. These flexible alliances would be a good deal more cost efficient and scalable. They would allow for the kind of innovation and competition that the current, rigid corporatist structure (in the West) currently does not.
When one examines Western capitalism, one continually comes to the conclusion that it has evolved away from entrepreneurialism and private markets and that this evolution is accelerating. While the Western model and especially the American model is complex, the statist bent is increasingly notable and has been for a while. Western governments may not fully own the means of production but they set the private market agendas of the businesses that operate within their boundaries. We can see this clearly – and most recently – in the announcement that GE is going to buy 12,000 Chevy Volts from General Motors, as reported recently in Forbes magazine:
This Is How Change Happens: GE To Buy 12,000 Chevy Volts ... GE says it will buy 25,000 electric vehicles, including 12,000 from General Motors, starting with the Chevrolet Volt in 2011, to help lead the way toward widespread adoption of electric vehicles. GE plans to replace half of its 30,000-vehicle corporate fleet with EVs and will deploy another 10,000 electric vehicles for customers through its global fleet management business. The company says it will start by purchasing 12,000 vehicles from GM, and then buy additional EVs from other manufacturers as they become available. The company plans to try a mix of plug-in technologies, depending on its specific needs.
"Electric vehicle technology is real and ready for deployment and we are embracing the transformation with partners like GM and our fleet customers," said GE Chairman and CEO Jeffrey Immelt. "By electrifying our own fleet, we will accelerate the adoption curve, drive scale, and move electric vehicles from anticipation to action." GE, of course, has a vested interest in the shift toward electric vehicles. It sells vehicle charging stations, circuit protection equipment and transformers that are key elements of the infrastructure needed to support electric vehicles. It also has a partnership with California-based Better Place to offer financing for battery purchases for Better Place's battery exchange stations and is a major shareholder of battery maker A123 Systems. GE also has interests in smart-grid and power transmission technologies as well as the wind and solar energy industries."
This story has the fingerprints of GovBiz (to coin a term) all over it. Of course to analyze it one has to begin with the Anglo-American power elite itself, which sets the larger promotional agenda. When it comes to what is occurring with GM, the course of events is fairly clear and has to do with an effort to promote a "green" corporate agenda. To this end, GM (rescued from bankruptcy by the US government) has begun to pursue an aggressive environmentally conscious business plan. We can see from the Forbes article that GM is not just producing electric cars but is also heavily involved in numerous green business offshoots.
One could, of course, make the argument that all this makes sense, but we don't think so. We don't see an exceptional level of private demand for wind farms and solar energy – both of which come with plenty of drawbacks. When it comes to GM's fascination with electric cars, we find ourselves even more skeptical. It doesn't make sense on a number of levels, beginning with energy generation which has now takes place at coal-fired plants that produce the electricity that Volts need. One has essentially taken a step back from clean-gas burning cars to coal plants that may indeed be "dirtier" for the environment.
But perhaps GM's new businesses are not about commerce, but are about realizing GovBiz command-and-control agendas. It has do (at least in part) with something we've written about before called SmartGrid. This is a flexible and fungible, home-installed facility that allows power companies to keep close track of a person's electrical consumption and even to control that consumption from a third-party location. We would argue that the powers-that-be are most anxious to implement SmartGrid, which is indeed being installed in various Western and third-world nations as we write.
Another reason that the powers-that-be want cars to convert to electricity from gas is because electricity is inherently a more limiting resource. Absent power stations and plug-ins, people simply cannot travel too far. Electric cars are great in an urban environment but they will tend to restrict people's mobility. As Western countries turn increasingly authoritarian, one can see efforts being made to reduce or at least limit people's ability to travel freely over large distances. We would argue that this is one of the outcomes of the "war on terror," which is discouraging people from flying because of the increasingly invasive security regime.
To really understand the growing interactions between Western business and government, one has to deal with the agenda of the Anglo-American power elite itself. This tiny, powerful and fabulously wealthy group of intergenerational banking families is interested in creating what has been called a New World Order. It uses mercantilism – the ability to translate self-interest into law – to centralize and expand world governance. Part of the elite's agenda has to do with exercising increased control over people's lives and living arrangements, and environmentalism has been the chosen tool for this task.
Environmental protection provides an endlessly flexible rationale for increasing government throughout the West (and around the world) and also for creating "private public partnerships" such as those we see between the US government and GM. It allows governments (under the control of the elite) to create an endless supply of laws and regulations meant to (eventually) control every aspect of society and people's behavior. Business itself is bent to this purpose through tax incentives and various forms of funding both private and public.
Within this context, then, we can understand GM's affinity for green businesses. And insofar as this deal with GE is concerned, one can see clearly how Western GovBiz works. GE is a main supplier of expensive military items to the US government and is thus quite amenable to the US government's larger agenda, whatever it might be. If BigGov wants GM electrical cars to seem popular, GE stands ready to help by purchasing a bunch of them. Of course it is not just BigGov; it is actually the larger agenda of the elite being carried out by the US government (and other Western governments as well).
There is little difference that we can see at this point between Chinese state capitalism and the American free-market variety. We know this is perhaps a cynical view, but large Chinese companies likely perform their functions at the behest of the state and American business is similarly controlled, or at least the larger enterprises are. The control extends to the stock market itself as many institutional buyers are funded by Western power elites and thus are going to make investments in elite businesses.
Conclusion: GM is getting ready to raise money once more (a lot of it) and apparently the effort is attracting positive attention in the larger marketplace. Now we wouldn't buy stock in a company that had made a commitment to green business and clunky electrical cars that travel only a small distance on a single charge and have to be recharged for many hours. But in the West (and especially in America), this sort of enterprise commands attention – and investments. To us, this is not a natural occurrence. But, then, we would argue that big business is not about what's practical for the market anymore. It's about what conforms to the command-and-control agenda of the Western power elite. That's not much different than China.
Posted by Lance Winslow on 11/21/10 12:26 AM
Indeed, I enjoyed your arguments from a philosophical and intellectual standpoint. Well-written too – I thank you my Dear Sir for making me think, this is the best piece online I read all week.
Posted by Michael Ponzani on 11/19/10 11:31 PM
I've noticed this for quite some time now. After Captain Eisenhower's Interstate Highway System was introduced here, the elite made plans to shut it down. President Eisenhower rightly warned of botha military-industrialist complex and a scientific industrialist comples in the same speech.
Apparently air travel was also a disaster for the controllers. (See, I'm going to be reeducated in the FEMA concentration camps.)
Look at Lew Rockwell for today or yesterday. Half the articles are about TSA perverts. Chester the Molester is NOT dead and gone form Hustler; he/she lives on in the TSA. Naturally no one wants to fly. This whole country has gotten travel arthiritis and we will all be confined, eventually, to scooters from the Scooter Store!!!
Posted by Al Kyder on 11/18/10 07:52 AM
Exactly Fake money, to creates fake debt to be repaid with real assets. I am watching Ireland very closely to see how the people handle this one. I get the feeling that trouble is ahead there. Why should they pay these Banksta's ? I hope they start a trend AmanfromMars. If I was there I would just squat one of these houses I would not pay a cent on the mortgage.
"That is probably empty just for the moment, AlKyder,"
Yes because these places in China all have a certain amount of Gov infrastructure, like schools and medical services etc etc they are likely waiting for such things. They are probably poised to exploit mineral resources in the area. Han Chinese working for BHP maybe?
...............But more than 2 million Muslims from the rest of the world who are now converging on Mecca have reason to thank Beijing.
Specifically, they can thank the huge, rapidly growing and grossly inefficient mix of opaque politics and state-dominated business known as "China Inc", which has just delivered a dual-track monorail linking Mecca to the holy sites of Mina and Mount Arafat.
The 18-kilometre line opened at the weekend in time to ease the transport bottleneck that begins each year on the eighth day of the Muslim calendar month of Dhul Hijjah. Construction took just 16 months. It will soon be able to handle 72,000 passengers an hour.
Saudi Arabian taxpayers have paid a steep discount to what they would to any non-Chinese builder, thanks to a hidden $US600 million subsidy from the Chinese contractor. But the best part about it, from Saudi Arabia's point of view, is that there are no strings attached.........................
Click to view link
Reply from The Daily Bell
So the Chinese are helping facilitate Muslim Holy Days. Interesting world.
Posted by AmanfromMars on 11/18/10 02:19 AM
"@ DB Hm-mm ... Just that one whole empty city in Mongolia built on "speculation." " ... Posted by Al Kyder on 11/17/2010 4:09:23 PM
That is probably empty just for the moment, AlKyder, whereas elsewhere in the crazy West, the idiots are financed by fools to build ghost estates which are brand new ..... and the talk is of demolishing them for they are a white elephant which laughs at them every day, reminding all of their folly and stupid greed .....
Click to view link
Although having got the money and run, do the developers and their financiers care? I don't think so, do you.
Posted by Vauung on 11/17/10 10:20 PM
@ Brian T., DB
IMHO, DB is being colloquial rather than technically exact when writing about 'memes'. A meme is a self-replicating cultural unit, analogous to a biological gene, that has no purpose beyond its own reproduction. Since DB is concerned with cultural themes devised deliberately to serve the interests of a specific social group (the 'Anglo-American Power Elite'), they are more strictly described as 'promotions' than 'memes'.
A meme theory of social power would look very different, with human agents -- even at the highest levels -- serving as the robots or zombies of blindly self-replicating cultural formations. That doesn't seem at all close to the model proposed here.
BTW Robert Aunger's The Electric Meme, A New Theory of How We Think is a valuable follow-up to Dawkins, and arguably the most rigorous construction of the idea:
Click to view link
Reply from The Daily Bell
Thanks for the link. You are correct about our use of "meme."
Posted by 4irw4y on 11/17/10 09:31 PM
You don't describe the role of mutual consent of the most passionate and organised elements of "the crowd". I'm nearly sure that it's the increase of printing production that involved the conscience of people in the countries with most successive turn of the capital. Yes, it was Christian economics. And it was destroyed similarly by removing the monarchies. In Russia, Lenin suddenly changed the British game for his own peronal benefit and took the power on the wave of the "informed" protest of the masses in WW I. The Orthodox Church was nearly destroyed, Christian business stopped. China had problems, too, but it's not about the faith. Italy escaped.
Whatever the Chinese way is, they need reliable trucks South-West.
Posted by RT Carpenter on 11/17/10 06:25 PM
America's economic decline has been almost continuous since the time of Eisenhower. Since then, we have rarely tried to balance our national budget or even retaliate against trade abusers. We pretended to "negotiate" or gave subsidies to our disadvantaged industries and farm products instead. We still give one-sided trade "breaks" to countries like Japan and South Korea for "base-rights". Of course, America has to help so-called "Emerging Markets".
And it is by no means over! We have nothing but "special interests" running our government. Our concilliator-in-chief provides no actual leadership. Reliance on buzzwords like "free trade", "globalization" and "flat earth" help avoid serious dealing with our trade problems. We also hear that we should never again have "Smoot-Hawley" type protective tariffs. We all "know" Smoot-Hawley caused the Great Depression, don't we?
Reply from The Daily Bell
The Federal Reserve caused the Great Depression and America, as you know in your less didactic moods RT Carpenter, has been in decline since the Civil War. Thanks for the post, though. A heartfelt sentiment obviously.
Posted by Cat Writer on 11/17/10 04:18 PM
You have been bookmarked. Great interpretation of Darwin. This is grounds for a serious indictment of the American people and keep up the good work.
A correlation: The worst dictatorship movements of the 20th century originated in orthodox Christian environments. The Nazis arose in Catholic Germany and were supported in Austria. The Communists took hold in Orthodox Russia. America has transformed itself into a police state as evangelical Christianity rose. This requires investigation.
When I was back in the USA, I had a Chinese girlfriend. She was from the mainland. When we were listening to some American politician's advert containing the usual collectivist nonsense, I asked her if she believed in what he said. She answered "No. It is not the Chinese way."
Posted by Al Kyder on 11/17/10 04:09 PM
The Wall Street Journal knows nothing about China. They are fools.
There is no inflation problem I see no basis for this article, If the Free Market fails China, they will just re-nationalise everything. China will not bow to the market not ever, so this does not apply, as the CCP controls China not wall street et al.
However, I like the analysis of how western corporations conspire with and bribe Governments. Nice work again DB
@ DB Hm-mm ... Just that one whole empty city in Mongolia built on "speculation."
The Chinese State media will deal with these anti-revolutionists when the time comes. "This is what happens when you turn your back on Marx" etc etc you get the idea. These places will be given to the poor, and the CCP will get credit for it.
Reply from The Daily Bell
OK. We will see.
Posted by Pete From California on 11/17/10 03:56 PM
I read the original in the WSJ -- my take was that the efficiencies of "state run capitalism" as contrasted with the current free market version was that the free market is simply being overly regulated and subject to frustrating limits resulting in lower economic growth in the west. SImilar articles appeared 20 years ago, praising Japan's Ministry of Industry for the statist central planning -- until Japan's economy collapsed after their real estate bubble exploded.
Reply from The Daily Bell
Yes, exactly. We've made the comparison, too. It is absolutely a red herring, but it will serve for the enemies of freedom to exploit until the Chinese economy collapses. And then they will move on to something else - if Western economies have not collapsed too.
Posted by Myron Goodrum on 11/17/10 03:06 PM
In regards to who owns the gold...again, I thought that China was encouraging its citizen/subjects to hold more gold? Is this because they may wish to nationalize it in the future to strengthen its position should a pre 1972 US gold structure (although $35 an oz would never work in these times) seem feasible on the part of the IMF or World Bank?
Posted by Mark Y on 11/17/10 02:33 PM
With the US government's TSA policy of taking nude photos and groping the genitals of air travelers and their stated plans to implement this tyrannical technology outside of airports, I wonder how much real difference there is between living in China and living in the USA today? The groping and nude scanners are getting a lot of (even main stream) media attention in the USA today, but I would be really surprised if the Congress acts to limit the growth of TSA and BigGov (Big Brother) power. Your suggestion that China and the USA are very similar is right on the money ‒ and very unsettling when the implications are considered!
Posted by Brian T. on 11/17/10 01:27 PM
You emphasize memes quite a bit. I have heard of them briefly from "The Selfish Gene" and the wikipedia page on them, but I am interested in learning more. Can you recommend some books on memes? Thanks and I enjoy your website very much.
Reply from The Daily Bell
Just Google "meme" and you will have more information than time to read it all. Thanks for the kind words.
Posted by AmanfromMars on 11/17/10 12:23 PM
"As to: "alliances of smaller companies". Unless they can be subsumed into a larger hierarchy, they remain independent and thus, uncontrollable. This makes them enemies, just like individualism, by definition of central controllers." ..... Posted by Bill Ross on 11/17/2010 9:04:11 AM
A Cloud of Virtual Friends, InterNetworking in Future Networks is controlled by Virtual Friends into Clouds, for the Benefit and Added Convenience of Invisible Transparent Cover on Operations to Facilitate SMART Mentoring and AIMonitoring of Rogue and Renegade Runaway Elements.
Smaller companies are nearly always One Man Bands with Virtuoso Peforming Artists Presenting the Audience a Show with the best of them into Creating a Timeless Master Peace. ....... and on Earth does Peace and Harmony appear to be an Alien Concept for there is everywhere, War and Conflict, Need and Suffering, and how crazy is it that you allow that to harm and destroy you. Is that the best that the world's bestest brains can deliver ...... an Epic Fail rather than a Colossal Success?
"In evidence given to the Science and Technology Committee, experts said that a concerted cyber-attack capable of damaging key infrastructure could currently only be launched by an enemy state." ..... Click to view link
You may like to also consider Non-State Actors given Enemy Status by the Enemy.
"Experts have said that Stuxnet's complexity means it could only have been written by a nation state." ........ Democracies need only reflect on the difficulties they have in doing anything remotely successful and of interest to emerging Cyber States, to realise that it is a Natural Leader in a State and not necessarily the State Leadership, which Drivers CyberIntelAIgent Operating Systems with NEUKlearer HyperRadioProActive IT Services.
Would would naturally have thought that in any State of Government or Rule or Reign, Special Intelligence Supply would Provide Leadership Tools with Future Content.
"Outside of the defence community there is no source of expertise," he said." ..... Well, no source of better expertise is the Master Plan, and that is probably best considering the damage defence can do when attacked or when abused and used for attack.
Oh, there's a very eclectic mix of individuals regularly posting on the Daily Bell, with more than enough Virtual Savvy to Offer CyberIntelAIgent Lead Play in Great Games AIdDevelopments ..... Civil CyberSpace [XSSXXXXPLOratory] Missions.
A Wild Wacky Western IntelAIgents Gift for SMART Perfect Bedouin Use and Immaculate Refinement.
Posted by Bill Ross on 11/17/10 11:42 AM
@DB: "price of gold will be distorted"
Of course, but there are competing alternatives. We are close to, if not past the tipping point where outright barter in a local economy with worthy (honest) trading partners is a REAL alternative. The scope of "local" has been greatly expanded by the internet. In such an environment, we can set out own price for gold (or anything) by mutual consent. In the final analysis, it must be asked: What do states / forceful monopolies actually have of value to trade and, is it worth dealing with them and, if they insist on our association per their unilateral terms, what is the pushback?
In the final analysis, forcefully imposed price distortions is mere mucking about with the laws of supply and demand. Unrealistic prices reduces demand and creates a demand for alternatives. We, the people are adapting our way out of statist control. Sucks to be them...
Posted by Bill Ross on 11/17/10 10:29 AM
DB: "Depends who owns the gold " citizens or the state " in our opinion."
Disagree. If a commodity is not traded with "we, the people" and private ownership allowed, it has zero value. If states or any entity owns all of a commodity and refuses to trade, it has zero value and therefore zero power (ability to coerce).
Like it or not, states / power organizations are forced to trade by the laws of reality. The current "terms of trade" are a protection racket, being left alone so long as we pay tribute and rent our rights. This has been wildly successful for states, to the point that their greed has severely negatively affected the survival of the majority losing "consent of the governed". Pushback is on an upwardly accelerating exponential curve because every productive individual who withdraws resources (or defends them, making seizure uneconomical) forces states to increase pressure (fixed or escalating state greed) on the remaining productive, alienating them, adding to pushback. This is compounded by the armies of those have been made dependent (and therefore enslaved) demanding entitlements that can no longer be afforded. Thus, we have fake money, printed from nothing, a rapidly failing fraud / meme, no longer able to appease.
The grim reaper of "Mathematics of Rule" is calling the tune. Matters will continue to exponentially deterioriate until absolute property and other lawful rights required for peaceful commerce (civilization) are restored:
Click to view link
Reply from The Daily Bell
If the state holds the gold and has the ability to dictate terms via mercantilism then the price of gold will be distorted and money will continue to be controlled. Fact.
Posted by Myron Goodrum on 11/17/10 10:05 AM
Interesting perspective. Yes, though no American wants to admit, there is not much difference between the two nations (the US and China) when it comes to big business and control/influence by the State. Heck, I would also venture to say...small business owners don't stand much of a chance either and are in the same boat as big business; consider all the State and Federal rules, licenses, fee's, restrictions and authorizations they must submit and comply with to go into business.
But what about the Gold! I hear China is loading up on the stuff? I never hear of the US loading up on anything except Debt? Wouldn't China's gold hoard insulate it some way from the inflation you speak of?
Reply from The Daily Bell
Depends who owns the gold - citizens or the state - in our opinion.
Posted by John Danforth on 11/17/10 10:01 AM
What Bill said. I urge readers to read his site.
Also, where can I buy a bucket of that free electromagnetic energy? I just built a machine that uses 1.5 megawatts of electrical energy continuously while it runs (it's true), and we could sure use some of that.
Posted by Bill Ross on 11/17/10 09:04 AM
DB: "we've discussed the idea that the corporation itself is an artificially manufactured entity and that, absent the current statist judicial system, corporations would not exist. What would be in place instead would be alliances of smaller companies (owned outright by individuals or partners for the most part), as well as joint-ventures that would do the work now taking place under one roof. These flexible alliances would be a good deal more cost efficient and scalable. They would allow for the kind of innovation and competition that the current, rigid corporatist structure (in the West) currently does not."
By George, you've almost got it! The Rosetta stone of what is undoing / defeating central controllers.
The purpose of forceful hierarchical organization is to achieve central control of the choices of the choosers at architectural control points in the hierarchy and replace the pursuit of self-interest of choosers with pursuit of the interests of the controllers. This utterly failed, decades ago and we have suffered the criminal behavior of choosers pursuing myopic selfishness in all of our social / economic organizations (government / law / finance) which can be loosely termed the economic crisis. So long as proceeds of crime exist, these perps will cover each other and refuse to hold each other accountable, so long as their turf remains amenable to predation. Now, the tipping point has been passed (all resources consumed / stolen) and the perps must expand their turf, warring on each other. They will do so under the pretext of accountability. The question is: accountable to whom? This is a process.
As to: "alliances of smaller companies". Unless they can be subsumed into a larger hierarchy, they remain independent and thus, uncontrollable. This makes them enemies, just like individualism, by definition of central controllers.
The elite problem is, central control restricts free choice, which equals ability to adapt to environment, equals survival. This is why elites are so determined to control our perceptual environment, to define a forcefully imposed, artificial environment, part of environmental control 101. The truth telling of the internet is a fatal dagger to elite machinations. The bigger they are, the harder they fall is a basic truth.
This is a scientific FACT:
Click to view link
As to hierarchy and central control (inability to correctly choose), this is the root cause of the demise of all civilizations, for all of history, most recently, the late, not so great USSR and now, the west. THINK about it:
Click to view link
Posted by Jeff on 11/17/10 08:48 AM
Reading this is almost enough to bring me to tears. What is a middle-age middle-class individual who believes in peoples' freedom and liberty to do? I am sickened by our government. The future appears so hopeless. My friends and family laugh at me when I try to explain what goes on around them. And these are successful, intelligent people. If they don't get it, I have little hope most anyone else does either.