Beijing (China Daily/ANN) - If I had been
asked more than 30 years ago, which I would prefer, a planned economy or a
laissez-faire free market, I would have chosen the latter as the best
pick-me-up for the country's abject economic condition at that time.
But if asked the same question today, I would
not hesitate to say that I would accept neither if they were presented in their
extreme versions.
I do not necessarily agree with all that David
Harvey says in his book, "A Brief History of Neoliberalism", about
the rise of neoliberal economics as "a state apparatus whose fundamental
mission" is to "reflect the interests of private property owners,
businesses, multinational corporations, and financial capital".
However, the Asian financial crisis in 1997
and the financial crisis on Wall Street with its ensuing global economic
meltdown testify to the truth of much of what Harvey says about the nature of
neoliberalism.
Harvey writes that the rise of neoliberal
economics since the late 1970s has mainly benefited the wealthy. In the United
States, the richest 1 percent now control 15 percent of the wealth as opposed
to 8 percent at the end of World War II. Harvey also points out that the
aggregate economic growth during the decades between World War II and the 1970s
was greater than during the neoliberal era.
But I would have accepted the free market
fundamentalism of neoliberalism in the late 1970s, because at that time China
was on the verge of bankruptcy. What the country needed then was free market
competition to reverse the dire economic situation brought about by the extreme
planned economy, which had almost choked to death the dynamism of economic
development.
I believe that many in the country must have
felt the same way. We over-emphasised the pros of laissez faire while
completely ignoring the cons. Our worship of the market economy was blind
devotion. We thought that way because we were narrow-minded and not well
informed at the time. We believed that a market economy would lead us to the
same prosperity as that enjoyed by our developed counterparts, though we knew
little about what was happening in the developed countries.
Back in the 1970s we never thought about the
downsides of modernity.
We saw the convenience of cars, but we never
considered the exhaust emissions that would pollute our air. We only thought of
the profit big factories-no matter what they produced-would bring us, and never
thought of the pollutants they would discharge during the manufacturing
process. We had our eyes fixed on the role of free competition in stimulating
the enthusiasm of labor, but failed to realise there would be those willing to
seek illegal or unjustifiable profits.
The gap between the haves and have-nots in the
country has been widening rapidly in the past three decades. Given the
country's per capita income is just over US$4,000, that China will likely
overtake Japan to be the biggest luxury goods consumer in the world speaks
volumes for the ever-widening income gap.
What China has achieved over the last 30 years
justifies the economic road the country has followed in the past three decades.
Yet, the state of the global economy shows that laissez faire can be a bad
thing when carried to extremes and it is high time that we in China rethought
the role of laissez faire in the country's economic development.
The blind worship of free competition without
accepting its drawbacks will be as detrimental to the country as the stubborn
adherence to the planned economy was in the decades before the late 1970s.
More than 2,000 years ago, Chinese philosopher
Laozi warned that it was important to guard against going to extremes, because
he realized that it is very difficult for people to see both the good and the
bad of something at the same time.
Using the good parts of something and getting
rid of the bad is the wisdom of our forefathers, and it is wisdom that should
also be applied to economic principles.
The author is a senior writer with China
Daily.
Zhu Yuan in Beijing/China Daily | ANN
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