“It was never about possessions. It’s about power,” Ralph Offenhouse, a rich industrialist unfrozen from a cryogenic chamber in the 23rd century on the U.S.S. Enterprise.
“Power to do what,” asks Picard.
“Power to control your life, your destiny,” Offenhouse replies.
“That type of control is an illusion,” Picard.
~Exchange in “The Neutral Zone” of Star Trek: The Next Generation
“He lives in a world which he cannot see, does not understand and is unable to direct,”
~Walter Lippman.
After discovering that two of my favorite commentators on China, Jude Blanchette and Orville Schell, contributed to a recent special edition of Foreign Affairs on the rise of China, I purchased a copy at Barnes & Noble last weekend. Needless to say, I was not disappointed. But I wanted to start this chapter on another purchase I made that day—The Economist magazine on No Safe Place in our 3 Degree Future.
The editor of The Economist is one the most erudite observers of current events and her cover story connecting our current climate predicament to the sublime thrill Edmund Burke once emoted when his boyhood home was about to be engulfed by the rising tide in Liffey was no exception. Like Bertrand Russell once said of Nietzsche, anybody who has spent any time at all actually reading this paragon of conservative thought will discover that he “was fundamentally unsound”. Yet even as modern observers should reject the morality of Burke, we can accept his thoughts on the fundamental tension involved in man’s quest to be master of all things. He wrote of this contradiction of world-altering might and impotence as the waters were rising around him that it forced him, “to consider how little man is…yet in his mind how great…Master of all things yet scarce can command anything.”
At first glance, it may appear that this formative experience of Edmund Burke is merely a digression for the work to be done in the 21st century if humanity is to reliably face the threats that confront it. But in a week where Germany and Henan were both wrecked by once-in-a-millennium floods, it is probably more accurate to say that we are now in the precise place that Burke stood in 1745 watching the water level suddenly rise around him. And both the perverse thrill and his wisdom should broadly resonate to the climate crisis as we now have a challenge that is the moral equivalent of war that could avert societal decadence in the decaying West too content with its prosperity. His insight on the elusiveness of control, what the author of a recent book calls “non-engineerability” (poorly translated from a German word unverfugbarkeit), also strikes a chord.
This brings me full circle to the problems of China’s governance explored in the Foreign Affairs magazine. In spite of their varying points of emphasis, from intellectual history, to the challenges of China’s growth model, to the personalistic rule of Xi Jinping, a good way to summarize that problem is that it has been thoroughly stricken with the illusion of control, or governance as “steering”. Blanchette’s excellent review of the scope of China’s governance challenges reveals concentrating personalistic rule within Xi’s sphere will aggravate rather than relieve those challenges. Likewise, Daniel H. Rosen writes of the quixotic attempts to structurally reform the Chinese economy that little has changed since the most respected China scholar at my alma mater, Susan Shirk, wrote The Political Logic of Economic Reform in China in the early 1990’s. Rosen’s thesis is that since 2012, President Xi and his trusted advisor, Liu He, have repeatedly tried to liberalize beyond the low-hanging fruit accomplished by Zhu Rongji in the late 1990’s, but have failed on the political front. Critically, that includes attempts to reign in new credit creation that has accelerated the growth of shadow banking akin to the networks that brought the U.S. financial system to its knees in 2008.
The consequences of these failed economic reforms are grave. During the 1990’s the component of economic growth attributable to productivity improvement was over 50% as the “access capital” provided by government officials expanded world-class infrastructure across the mainland, declined to 25% as the limits of that model started to be realized, and now has diminished all the way to zero. Contrary to the “Made in China 2025” public initiatives that seek to portray the country as an unstoppable technological juggernaut, growth, to the extent that it is even maintained, does not come from genuine technological advance, but from squeezing the (shrinking) labor force. That may very well explain the discontent of tech workers, who describe their existence as “involuted”, the anthropological term for having to exert more effort to receive the same reward. Many of these young university graduates are finding inspiration in the Daoist sage Zhuangzi, turning their back on gainful employment to “lay flat” and pursue leisure.
These symptoms, which threaten to metastasize in ways that give the leadership at Zhongnanhai great anxiety, are emblematic of a broader problem in China’s growth model. Yuen Yuen Ang, previously celebratory in How China Escaped the Poverty Trap turns her attention to China’s Gilded Age, arguing that drug metaphors are appropriate for examining the impacts of a particular kind of corruption at a given stage of development. Petty and grand corruption are hard drugs because the obsessive search for rents is debilitating for the same reason nobody finds potential in a street junkie. They can think of nothing else but where to get their next hit. The corruption at the heart of China’s growth model is of an altogether different kind as it has effectively “greased the wheels” to give entrepreneurs, officials, and developers, and incentive to build modern China.
Ang argues that this corruption is more like a steroid in that it may make China appear invincible and give it a competitive edge over the West during its prime years, but that edge requires dangerously increasing dosages to be sustained, a trajectory that is not without adverse side effects. Some of those adverse consequences are not wholly unfamiliar to Western countries with over-valued asset markets, particularly the U.S. Like their American counterparts, Chinese businesses face perverse incentives to abandon productive enterprise, i.e. precisely those activities that the economic historian Jonathan Levy describes as unnatural, and return to the natural and easier state of affairs of extracting rent from the value of land. Whenever this is realized, an almost feudal inequality envelopes the body politic, “a perverse situation in which the minority of Chinese people who own homes often do not live in them and the majority who need homes cannot afford them.”
Along similar but slightly orthogonal lines, I would argue that the adverse consequences of dependence on access money to get things done is more like an attention stimulant than a steroid. When the tasks can be narrowly defined according to an engineering sensibility, it allows a nation to accomplish seemingly superhuman feats of endurance, but the metaphorical stimulants also closes off the creativity necessary for tasks that are not so easily defined.
In a wonderful review essay of three recent books on the intellectual history of the CCP, Orville Schell writes of the fragility of any nation afflicted by the mindset of control, hoping for the humanistic “recessive gene” tendency to once again reassert itself:
But when one factors in the party’s history of fratricidal struggle, fixation on control, obsession with ceremony and mania for propaganda, a different picture emerges…of an insecure neo-Maoist techno-autocracy that needs state control and Wolf Warrior diplomacy to assert national greatness. Such a rigidly controlled brittle, and belligerent system contravenes of of the most powerful of human urges: to enjoy as much liberty and freedom as possible.
This particular juncture in the Party’s 100 year history offers a window to how Xu Zhangrun, Cai Xia, and other humanist intellectuals who are more quietly tinkering on their ideas may one day foment rebellion against control and escape the Leninist project to engineer the human soul, an alien ideology foisted on China from the Soviet Union. In a podcast discussion of his forthcoming book, Retrofitting Leninism, the political scientist, Dimitar Gueorguiev characterizes that project:
One of the key features of the control/inclusion architecture is that inclusion is only manageable because its controlled because society is fragmented, compartmentalized, and kept apart, which makes it very difficult for interests to cooperate and coordinate, but by having these controls in place to facilitate inclusion in a choreographed and controlled manner, you [meaning the panopticon at the center of the party-state, which the Party historian, Richard McGregor, once characterized as a form of omnipotent authority because it can see everything but you can’t see it] can extract information from these discordant interests.
Frederick von Hayek, who once wrote that the Free World had an in-built advantage over the satellite states behind the Iron Curtain, may have the last laugh after all due to the decentralized ways they process information. A Shenzhen official quoted in the conclusion of the book is perhaps most aware of the headwinds involved in trying to “steer” governance systems that are increasingly complex and bedeviled by redistributive challenges:
Sea vessels moving at high speed generate turbulence in their wake. As long as they move swiftly enough, the disruption is unlikely to threaten those aboard. As the vessel slows, however, it can get caught up in the unrest generated in its passage. First, the void left turns to drag. Next, if the flows too fast or tries to change course too suddenly, the former ripples cast threaten its rear or broadside. The bigger the ship, the bigger the risk (emphasis mine).
There is something deep to ponder here as we are swiftly rebuilding the pyramids of debt embedded within a global financial system of interactive complexity and tight coupling that reproduces bigness, compelling swift course correction by central banks in ways that heighten risk, as the economist Ann Pettifor warns in a recent editorial for the British Prospect. But the more topical point on China’s growth trajectory is that China may no longer be moving swiftly enough for broad-base growth legitimacy to be effective. It may be forced to increasingly rely on re-distributive tricks of the asset economy usually only observed in developed economies. Observers of Chinese monetary policy, both in business and academia, are already starting to note that the PBOC is behaving like a developed country, not an emerging market.
I think I want to delve more deeply into this idea as it is the flip side of a phenomenon I explored in my thesis on the inconsistency of U.S. eviction protection laws —rich country problems in a developing country. One wonders what a sudden end to the aforementioned economic historian, Jonathan Levy’s, “Age of Control” premised on the assumption of stable Keynesian demand management will look like when export-oriented income suppression forces China’s hand to abandon control in the Age of Chaos, while still operating within the framework of retrofitting Leninism Gueorguiev describes. Like Gueorgiev, I’m confident that Chinese policymakers will be able to navigate that difficultly as there is a Chinese idiom that captures China’s future well. There is always hidden order within irreducibly complex environments that, at first glance appear chaotic (luanzhong youxu 乱中有序).
