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On the anniversary of the founding of the People’s Republic of China, the United States government careened into a shutdown. Parades and festivities engulfed Beijing while Americans faced shuttered social services and the threat of self-inflicted default. This apparent coincidence might serve as a symbolic, if not clichéd, illustration of the late Giovanni Arrighi’s argument in his last book, Adam Smith in Beijing. We are witnessing the fall of a hegemon, he claims, and we’ve seen it before. In the aftermath of World War Two, the U.S. was the rising creditor-power, about to surpass then debtor-superpower Britain. Now America has its own mountainous war debts financed by China.

I’ve come to these reflections by way of living in Shanghai, where I’m self-exiled for the near future. Imperial decline ranks around fourth on the list of things Americans in Shanghai contemplate. First, in this city of remembered colonial pleasure, is getting rich; second is how to begin tomorrow’s English lesson; and third are glib musings over communism and capitalism, which usually cycle back, with alarming alacrity, to the first notch on the list.

Shanghai is a place strung between east and west, the division multiplying across categories: historical, cultural, political, economic, architectural and geographical. I live on the city’s west bank, Puxi, which corresponds to whatever historical notion of Shanghai you might have. Lining the west bank’s eastern margins is the Neo-Classical grandeur of the Bund, the curving riverfront boulevard that greeted and entertained Shanghai’s colonial class during the early twentieth century. Aging and stately by day, at night its rich, golden lights, at once luminous and subdued, figure into a sort of modern ambivalence over the city’s nostalgia project. Across the river, Pudong displays an ever more dazzling array of wildly colored light-work and glaring architecture, adorning China’s premier financial district and declaring itself in opposition to the Bund’s colonial fetish.

Pudong, the city’s east bank, was transformed in 1993 from a patchy depopulated constellation of farms and marshlands to a glittering finance mecca. The symbolism is striking. In the twenty-first century, it will be Pudong, the fruit of the Party’s foray into finance capitalism, that dominates Shanghai’s skyline, and not the nostalgic and “museumified” Bund. The Bund is now more a place to stare from than at; Pudong, with its look of futurity, is even called “the Bund of the twenty-first century.”

There is a different narrative on offer by the Shanghai Urban Planning Museum, where a short propaganda film recounts a history of national triumph over foreign invasion. At first two Chinese men with Fu Manchus and black robes take snuff at a long table; then cannon shots ring out, the two men peer out in dismay, and the Opium Wars begin. Finally, after a humiliating century of colonial control that the film depicts by replacing the robed Chinese men with a pair of plotting, liquored foreigners, we see the glorious ascendance of the Communist Revolution. The ending is an obvious bit of historical anachronism: it’s 1949, the Communists have just taken power, but the screen shows the famous skyline from Pudong’s financial district. From the Party’s rise to the Cultural Revolution and on through China’s contemporary shake-up of the capitalist order, “The People’s History” implies China’s seamless continuation on a singular and un-dialectical path towards modernity.

This farcical idealization of revolution sells short what is actually most compelling about revolution in China. Here revolution encompasses republicanism in 1911, communism in 1949, and the later hybrid engagement with capitalism, among other quieter reversals and transformations. It unites a string of restless attempts, retreats, and advances in the name of a modernity yet to be reached or even fully imagined. For me, the most exhilarating part of reading and thinking about China has been the chance to see through its revolutionary history the de-coupling, in both practice and theory, of modernity and capitalism. In China’s imaginative, byzantine, and often harrowing project of modernization, late capitalism is only the latest in a series of systems searching for progress. And yet for most observers China’s fate is treated as more linear. What is modernity? Capitalism. And who in the near future will lead the global capitalist order? China.

Of late, China pundits have proceeded with new reservations, if not something closer to hysteria. China, people will whisper to you, threatens to explode. The market is overheated; the economy is not liberalizing fast enough; debts for provincial governments, consumers and businesses are accumulating swiftly; Europe and the US, still flagellating its people with austerity programs, aren’t buying China’s exports at the old rates; unreported protests in the countryside are continuing to rage; and this past summer the luminaries at 60 Minutes aired the second half of a two-part special on China’s supposedly inflated construction bubble.

Is there truly reason for concern? Perhaps. China’s growth has slowed to around 7.5 percent, clearly enviable but also its lowest in fifteen years. Still, much of the uproar is itself overheated—a sort of punditry bubble, always inflating somewhere, for China’s looming financial crisis.

And yet it’s true China’s economy has structural issues. The most interesting of these involves its relationship with America. To come back to Arrighi, his analysis suggests—through reference to Britain’s early to mid-twentieth-century passing of the capitalist crown to America—that China, once it shifts from financing U.S. debt to investing in domestic projects, will likewise begin its gradual ascent to global superpower. This is in many ways a sensible and under-examined parallel—America, in the wake of World War Two, investing in social programs and infrastructure projects that re-routed capital away from financing Britain’s debt—but two complications arise. First, without any currency acting as a plausible counterweight to dollar supremacy, U.S. bonds remain a necessary investment for China and much of the world. The only way to change this arrangement is for China, some other power, or perhaps more likely an assortment of other powers to wean slowly off the dollar through political agreements, further economic expansion, and much greater financial liberalization. (China is currently experimenting with financial liberalization, turning Shanghai into a free-trade zone where measures like loosened capital controls, full currency convertibility, and the admittance of both foreign and domestic private capital into China’s banking system can be tested on a micro-scale.)

The second complication is that China has already been investing in itself at significant rates. But what matters isn’t only that it invests domestically, but how it invests. So far it has largely been infrastructure projects, adding to the frenzy over the allegedly overheated construction bubble. Doubtlessly valuable, infrastructure investments haven’t been able to deal with the structural challenge at the heart of China’s development: how to change from an export-driven to a consumption-driven economy.

But financial bubbles don’t creep up in China like they do in the U.S., where everyone feigns amazement at first and then two years later pontificates about the obviousness of it all. In Beijing they’re anticipated from vast distances; if they burst it’s due not to lack of preparation but to a failure of initiative. Accordingly, the main solutions to China’s stagnation, floated here and there on the Chinese media, have been technocratic. Methodical and experimental financial liberalization is one strategy; increased urbanization and adjusted urban registration laws is another. The more people there are in the cities and the less toiling in the countryside, the idea goes, the more people will consume, the more jobs will be created, and eventually you have something like a middle class society—albeit one still wracked by inequality and environmental degradation.

Suppose these solutions work. China liberalizes its finance system; it cultivates a consumer base and grows less reliant on exports to the West; and then begins a new, Chinese sequence of capitalist accumulation. But even this, of course, would not change the outlook in America. It is not the loss of global supremacy that is at the heart of American anxieties, but the instability of the domestic economy. Amid all the murmurs over China’s imminent financial crash, it’s the U.S. economy that has proved most unwilling to restructure itself. Public investment has dipped to its lowest since 1947. Underemployment remains high, consumer spending has yet to rebound fully, and meanwhile the economy whirrs on, propelled as much as in the years preceding 2008 by the boring, abstruse magic of finance capital. The U.S. economy is reconstituting itself only to pose, for another illusory gilded moment, on the edge of disaster.

Slavoj Žižek is not the charismatic philosopher he once was. People don’t seem as charmed now, when they see him tugging at his shirt, manically rubbing his nose, or explaining why he keeps his socks in a kitchen cabinet. At one time awed by the thrills of his dialectics, the left is now turning away from Žižek’s political prescriptions, which too often appear vulgar or ineffectual. One of his more recent pieces, though, on the state of global protests from Greece to Turkey, Brazil, and Sweden, lays out thoughtfully the tension, for many on the left, between radical economic and seemingly liberal political objectives.

“Two traps are to be avoided here,” writes Žižek. “False radicalism (‘what really matters is the abolition of liberal-parliamentary capitalism, all other fights are secondary’), but also false gradualism (‘right now we should fight against military dictatorship and for basic democracy, all dreams of socialism should be put aside for now’).” Instead, we need to carve a space in between revolution and reform.

For some time after Deng Xiaoping’s pro-capitalist reforms, the assumption was that capitalism would bring democracy. Almost always this meant Western-style liberal democracy, and in many circles the hope still exists, if not the certainty. What should be remembered, though, is that democracy’s radical potential extends far beyond its liberal variant. For a while now there’s been a problem of designation on the socialist left. No one seems to know what to call herself. Žižek and Alain Badiou have attempted to rescue the term “communism.” Benjamin Kunkel, noting the implausibility of that recommendation and the enveloping of socialism by European parliamentary capitalism, offered “commonism.” I’m wondering if a better idea isn’t to take something we all already agree with and then work to radicalize it. My suggestion: democracy.

One of democracy’s most interesting proponents today is the Beijing-based intellectual historian Wang Hui. His thought borrows from an array of thinkers and ideologies, engaging Marx, Habermas, and Lu Xun in a rejoinder to those who push for the sort of Western-style political liberalization in China that proceeds apace with economic liberalization. Hui argues:

The reliance of the election process on large amounts of money and financial resources has resulted in the existence of both legal and illegal forms of election fraud in many democratic countries, thus destroying public confidence in the election process. This is not to say that democratic values are dead. The real question is what kind of democracy do we need and what form should it take. How do we make democracy something more than an empty form, into something with substantive meaning?

Needless to say this question is as important in America as in China – and Hui offers some helpful insights. A more meaningful democracy requires attending to the contradiction at the core of liberal capitalism: its call for democracy in parliament, but not in the office or factory.  If China is going to advance the cause of democracy, it needs to do so in its economic and social spheres as well.  But how might this actually happen? What would a broad democratic program, rooted in China’s political and economic reality, look like?

I’ve recently made the curious decision to subscribe to the Financial Times. The FT’s take on China’s stall, shifting from concern to optimism and back to concern in dumb reverence to the latest quarterly report, is that China has to change from an investment-driven to a consumption-driven economy. It’s a slight tweak on the old formulation—export-driven to consumption-driven—and seems to signal a new characterization of the Chinese economy. You’ll notice there’s only one endgame: more consumers.

One of the ambivalent pleasures of considering yourself a Marxist is the suspicion that you understand capitalism better than the short-term obsessed capitalists. (Wall Street-types, and certainly Party careerists in China, are now engrossed in Capital reading groups.) What seems beyond the FT’s imagination, but lurks trespasser-like behind the curtain of their thought, is the need for the two models—investment and consumption-driven—to collapse into one.

I’m talking about social programs, something borrowed from Keynes’s views on economic restructuring—wage gains, public investment, full employment, and therefore increased consumer spending—that perhaps also remain the key to revitalizing America’s economy. Certain historical moments provide opportunities for class convergence: for ruling and under classes to articulate a shared goal. Happily this is one of them, in both China and America. China now has an opening to join together the extension of capitalism and global political influence with the creation of a novel and inventive welfare state. More consumers now has the potential to mean not only more capitalism, but also more socialism.

Demands for a heightened socialism in China would have to appeal to the need for a larger middle class with more expendable income, to visions of social harmony and market socialism, and to general improvements in standards of living: issues that must be confronted for China to transition to the next stage of economic development. And yet, in keeping with expectations, these issues are rarely connected to the need for a strengthened welfare state. Signs of the reinvigoration of China’s trade unions, or the occasional rumor about building low-income housing and improving slum conditions, point ahead inconclusively to a more just future. But grander ideas for making a more meaningful democracy, for moving beyond the impoverished politics of imperial rise and fall, seem further off, perhaps beyond Shanghai’s horizon.

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