China’s recent decision, revealed by President Xi on October 16, to make the SOE’s the key to building a socialist economy is a reminder that their targets of 2021 and 2049 are around how to share the wealth of the nation.
Some think words like “socialism” and “capitalism” are anathema. I prefer to think of them as a difference in priorities but both value growth, innovation and caring for the people. The difference is which system comes first and the skills of the managers, as well as their real core souls.
The West had unplanned Industrial Revolutions and Capitalism is pretty embedded and reinforced with a long history of Christian ethics and missionary values. So Capitalism reigns and is likely to for a long time, unless it self-destroys…which it has not despite several attempts, and is, therefore, unlikely to.
China, on the other hand did not have an Industrial Revolution until the last 38 years , and it was planned, much like the historical nature of China’s inherent system.
So Socialism with Chinese Characteristics, where the centre leads the macro, would appeal and fit. China’s system over hundreds of years is for the centre to take care of the macro and enable people to grow and develop their own lives.
I doubt that will change.
China is currently going through the much needed planned market economy phase – I call it managed capitalism… – and the private sector and the mixed economy are enjoying a period of exceptional visibility and growth. Whatever you call this phase innovation, if prioritised, and it is , requires exceptional rewards as one of its features. So the planned market economy is unfolded. Tricky stuff. With lots of misleading stories as their experiments yield results, not verdicts as some in the media would like to conclude.
You have to be good at managing the market economy. You have to expel corruption or it cancers the system. You have to be able to manage rewards versus social values. You have to be good at managing risk and over-emphasising reward.
The story below could be seen as failure of managing capitalism, or an example of the Chinese being brave and being in the sea to learn from it. Beware those who draw the wrong conclusion that this is evidence of China being no good at managing capitalism. I will put money on it that, short of a war, the Chinese will be a major player in all capitalist arenas with some exceptions.
Their slogan is – never give up. They have to master capitalism to enable it and to benefit from it. But their socialist use of capitalism is only of limited value to us in the West. We are quite different and we will not change easily. We rejected SOE’s so they cannot fund our Welfare States.
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