As we periodically ponder what is going on with China’s slowing economy, it might be worth stepping back to take in a more fundamental question. China’s fabulous growth over the last 25 years appears to call into question a favorite thesis of free marketeers such as Milton Friedman, namely, that in the long run you can’t have free markets and undemocratic government. You can for a while—think Chile in the 1980s—but sooner or later something has to give.
As I say, China appeared to be a massive case study that this view is wrong. But maybe crunch time is coming for its authoritarian structure after all. Yesterday the Wall Street Journal reported that capital flight out of China last year was $676 billion, which represented about 80 percent of total capital flight from Asia. “Negative investment is really bad for the [Chinese] economy,” the Journal quoted one economist.
Why is so much capital fleeing China, the land of Tom Friedman’s great opportunities? There can be a lot of reasons for this, but none of them are good, and the lack of political freedom—of a genuine, non-corrupt rule of law with real democratic participation—certainly can’t be ruled out as prominent among them.
The fact that a lot of it is coming to the United States tells us that despite our misgovernment in the Age of Obama, this is still the best place to safeguard your capital—or still will be until we get Colonel Sanders Cambridge Fried Economy (slogan: “a chicken idea in every crackpot”).
Concerning the prospects for real liberalization in China, there’s an interesting article in the new issue of Interpretation: A Journal of Political Philosophy, which is not exactly lay reading, from Xiaofeng Liu, a professor at Renmin University in China, on “Leo Strauss and the Rebirth of Classics in China.” (Cue sinister neocon mood music music here, if you’re a whack-liberal.) It seems Strauss’s works, and his method of asking fundamental questions, are catching on at some Chinese universities, and providing a rival to other trendy Western thinkers (insert the usual French idiots here) that Chinese universities think they need to follow.
As with any such article translated from a Chinese academic, it’s not clear how much is lost in translation and how much is the author being very careful in expression. I like this sentence for its understatement:
It is obvious that each time Western works on political philosophy and law are introduced, controversies arise. This seems to indicate that Chinese intellectuals are strongly opinionated in this regard.
You don’t say! But the reason for the interest in Strauss is declared more directly in due course:
It is not difficult to understand the reason for Chinese scholars’ discrimination: for them, this is not a purely scholarly endeavor; their major concern behind this project is a crucial and practical problem, namely, how to shape a new China. . . In Western universities, Strauss’s thought is not a very trendy topic, but the Chinese intellectual community has indeed paid much attention to him. [Emphasis added.]
Keep this up, and Chinese capital flight just might start to reverse. Intellectual capital, too.