Tuesday, March 25, 2008

Unpleasant Parallels

Zhao Ziyang was general secretary of the Communist Party in China at the time of the 1989 demonstrations at Tiananmen Square. By openly advocating "democracy and the rule of law," he became a hero of the demonstrators, which made him a threat to the prevailing authoritarianism of Premier Li Peng and state chairman Deng Xiaoping. (Deng's titles may have been modest, but he was the one who ordered the troops to surround Beijing and attack the demonstrators.) After the massacre that dispersed the demonstrators, Zhao was charged with "splitting the Party" and "supporting chaos;" and, as a result, spent the rest of his life under house arrest (at the rather auspicious address of Number 6, Wealth and Power Alley, Beijing).

Perry Link has provided this background in the latest issue of The New York Review as a prologue to reviewing a book recently published (only in Chinese) by Zong Fengming, which documents conversation he had with Zhao between 1991 and 2004. (Zhao died on January 17, 2005.) The book was published in Hong Kong and, as might be imagined, is banned in China. However, Link's review is less interesting for throwing a critical light on China when current circumstances have made that light pretty critical already. Rather, it is interesting because, from his position of exile, Zhao managed to transcend the questions of power and return to his original expertise, which was economics.

Zhao's rise to power had much to do with his efforts to advance the Chinese economy, particularly in the period from 1980 to 1987. Thus the value of this book lies in his perspective of that economy at the time when it was growing most prodigiously. From that point of view I would like to reproduce several paragraphs of Link's text (which include translations of passages from Zong's book) as a reflection of the current conditions of the economy, not just in China but also globally:

He [Zhao] comes to see, for example, that democracy is not just an attractive luxury that a modern nation ought to want for its own sake but an indispensable condition for the survival of a healthy economy as well. He told Zong that, during the 1980s,

I thought that as long as we get economic reform right and the economy develops, the people will be satisfied and society will be stable.

But by 1991 he felt that

political reform must go forward in tandem with economic reform … [otherwise] a lot of social and political problems will appear.

"Democratic supervision" is necessary. By 2004 he had concluded that "a market economy under a one-party system inevitably produces corruption" and that China's economic growth was now "deformed."

Zhao's analysis of how China's growth came to be distorted is very close to that of He Qinglian, whose 1998 book China's Pitfall Zhao read in captivity. In Zhao's words,

people who hold political power use that power to control resources and to turn the wealth of society into their own private wealth.

This happened inside a "black box," beyond public supervision, and on "an enormous" scale. On September 18, 1998, Zhao tells Zong:

As the market economy grows, it leads to the marketization of power and the fungibility of money and power, which leads to large-scale swallowing up of state resources, chaotic capital formation, extortion, and blackmail. This, in turn, makes popular opinion boil and leads to the formation of a privileged class, a growing gap between rich and poor, and other social problems that only get worse the more they pile up.

Five years later Zhao observes:

The government seizes land from the people, pushing the price down to a minimum, then hands it over to developers who sell it at a huge mark-up. It also manipulates stocks and figures out how to siphon off society's monetary resources—like the savings accounts of ordinary people—using the funds for public construction that stimulates internal demand and keeps growth high. … If people were free to shift their savings out of state banks, the savings would flow overseas and growth would end. There could be a rush on withdrawals and banks would be in crisis.

And where were China's intellectual gadflies as this went on? The voices that had been so eloquent in the late 1980s? By 2004 Zhao Ziyang saw the intellectual elite as having been co-opted:

Economic reform has produced a tightly knit interest group that is now joined by students who have been educated in democratic countries of the West. These people have succumbed to power, and what we now have is a tripartite group in which the political elite, the economic elite, and the intellectual elite are fused. This power elite blocks China's further reform and steers the nation's policies toward service of itself.

Zhao concludes that "socialism with Chinese characteristics' has produced "power-elite capitalism," which is "capitalism of the worst kind." He reflects that he had once accepted the argument that free speech is a luxury when people have empty stomachs, but now (in 1998) sees that the two are connected: without free speech, one gets a "deformed economy."

This is heavy stuff, but much of the weight comes from its potential for generalization. I would not be at all surprised if those references to elitism could not be traced by to the insights of C. Wright Mills, who began to examine elite concentrations of power in American society after the Second World War and by 1956 had collected his insights into the book The Power Elite. We can read Mills today as one of the most insightful of oracles to anticipate the current dire state of our economy; and, assuming that he was in a position to get his hands of Mills' writings, it is likely that Zhao read him the same way. However, even if Zhao was not able to draw upon Mills directly, his analysis of a "deformed economy" should be enough to awaken us to the extent to which the United States has been going down a path not that different from the one in China. The primary difference is that, while China has tended to deal with voices of dissent through brute force, the power elite of the United States has co-opted the capacity of the media to distribute information, thus "lowering the amplitude" of those voices to virtual inaudibility. So, while Zhao may have been talking about China in his conversations from exile, that exile may have deprived him of the opportunity to recognize the extent to which China was becoming the new model of an economic superpower; and, in the context of China's investment in our own debt, that model can only become more and more influential, whatever our cultural differences may be.

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