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Ludwig von Mises against China

Why The China Model Is Unsustainable

 

(Spanish version - PDF Version)

 china-flag-wave

From the point of view of the post-2004 Western perception of China, its economic shift, at least on paper, has been praised both by the classical liberals who follow the model of John Locke or Ludwig von Mises and by the socialist antiliberals who feel more comfortable with Marx’s Manifesto and Dewey’s educational suicide. Both sides have hijacked “China” as a particular concept than can be accommodated within virtually any political framework, a practice than can be traced back to earlier Western Enlightenment  thinkers like Malebranche, Leibniz, Wolff, Montesquieu, Voltaire, Toland, or Quesnay, just to name a few. These philosophers, as relevant as their respective systems may be, were not interested in China as an object of study but, rather, as a corroboration of their previously formulated ethical and political thesis.

In Spain, liberal authors like Luis Torras or Francisco José Contreras believe that China’s economic expansion should be seen as the raison d’être for further development of human rights, democracy, capitalism, and liberalism. In other words, they believe that, since liberalism is “right”, and China is indeed growing, China should be experiencing a transition from communism/socialism to democracy/liberalism. They could not be more wrong, and if they had read von Mises more carefully, they would have noted it.

Let me illustrate my point with a personal experience I had in 2011, when I had the chance to discuss this topic with a professor from INSA, a remarkable business, marketing and communication private school in Barcelona, Spain. I was very skeptical about the development possibilities of Marketing 2.0 courses for Chinese students because it was focused on social networking websites like Facebook or Twitter, which were, and are, banned in China. The professor, whose name I don’t recall, explained that China will obviously open itself to the marvelous wonders of liberalism and then such knowledge will be very valuable for new entrepreneurships. As for 2014, not only Facebook and any other Western social network are still blocked in China, but just one month ago the Japanese networking system LINE, used in many Asian countries from Thailand to Taiwan to South Korea, and with more than 400 million worldwide users, has been added to the Chinese Hall of Infame.

On the other side of the balance, the side that assures us that von Mises was wrong, the huffingtonians call classical liberals “morons” and Chinese economy’s sons “geniuses”, whereas they prostitute “liberalism” as a leftish ideology closer to Karl Marx than it is to John Locke. Second time around: they perceive socialism as “positive”, classical liberalism as “devil”, and since China is indeed growing, this serves again as a “confirmation bias”.

What all these authors have in common is that they have much more education in economics than in China. In fact, they are totally ignorant and their understanding of China is, like that of the Western Enlightenment philosophes, almost pure superstition.

There is a key passage in von Mises’ seminal work, Liberalismus (1927), where he discusses the impracticability of Socialism (II.4):

 

A socialist state of this kind is not comparable to the state enterprises, no matter how vast their scale, that we have seen developing in the last decades in Europe, especially in Germany and Russia. The latter all flourish side by side with private ownership of the means of production. They engage in commercial transactions with enterprises that capitalists own and manage, and they receive various stimuli from these enterprises that invigorate their own operation.

 

Or simply put: “Anticapitalism can maintain itself in existence only by sponging on capitalism” (IV.5). And this is exactly what China is doing: sponging on capitalist societies in order to sustain its socialist –and unsustainable– system. By manipulating their currency, violating intellectual property by selling low-cost rip-off products that will break up just before you get back home, building large infrastructure projects that will remain empty forever, and working side by side with the private ownership of the means of production that Hong Kong offers them, as their so-called “Special Administrative Region” free to parasite, China goes on sponging the countries of the world, capitalist or not, from Hong Kong and Taiwan to Africa and Ukraine’s 5% territory.

            China shows that von Mises was right: Socialism is unsustainable. The rest of the (still) capitalist world shows likewise the same fact: that economic freedom can only flourish among politically free people. Otherwise, they shall abuse our own.


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