He is not entirely wrong. Yes, indeed, China used industrial policy and defied the neoliberal policy prescriptions. It went against the dominant paradigm of the time. But global context matters Jostein.
China’s industrialisation coincided with two major trends in the 80s and 90s. The first was widespread deregulation and trade liberalisation based on neoliberalism, which was aggressively pushed internally and globally by Margaret Thatcher and Ronald Reagan. The second was the beginning of hyper-globalisation and the entrenchment of global production networks.
In this case, many American manufacturers wanted to take advantage of low wages in Asia, so they offshored their production. This is how America lost its manufacturing capabilities, and semiconductors are a perfect example in this case. Without the widespread trade liberalisation of the time, China would not have found a market for its goods, no matter how cheap or efficient.
Many countries, including South Africa, saw their industries evaporate as soon as they liberalised their markets, following the dominant paradigm of the time -neoliberal ideology.
All of this requires strong state capacity and consistent implementation. This is true not only for China, but also for Japan, South Korea, and Vietnam. The same applies to the industrial rise of the United States, France, Germany, and Russia in history.
Is the issue whether access to Western markets is a just a necessary (but not sufficient) condition for China’s development or whether it was not even necessary at all? China would develop anyway but take longer?
I think we can all agree that access to Western markets is at best a necessary condition. And we can debate how quickly China could have developed on its own, but clearly the West benefited from China’s participation in the global market. I would not attribute this to “neo liberalism” or any sort of liberalism, let alone any implication that the West was doing China a favour. The West wanted to make China part of a global economic system in which the West would remain dominant. Lucky for us they miscalculated!🤣
When the west claims credits for china's success, they ignore the fact that by their theory the market has its own logic, because that means whatever they did was forced upon them by the law of economics and China would have developed anyway, which undermines the narrative they try to build which is that "the west opening to China" was their benevolent design.
I think this is right, with the VERY important caveat that this was only possible under fiscal dominance and fiat currency usage—which is unstable.
Under an international sound money system, the neoliberal (and classical liberal) assumptions would hold. Transparency and free markets would be rewarded, not state-backed action, financialization, and capitalization.
You don't say what Rosenthal's reaction to you making this clear to him was. I assume he was unmoved.
I really had to stop reading the Economist recently and when they do that survey about why I was leaving I mentioned their skewed China reporting as one reason. I doubt anyone at that publication read my comments. :-)
Many of the investments overseas by Chinese privately-owned enterprises were blocked by western governments with the pretense of national security. Otherwise, there would be more win-win opportunities arising from such investments.
China did not rise by “embracing free trade” in the abstract. It rose by practicing selective integration while retaining control over strategic layers of the national constraint stack.
The real divide is not openness vs closure, but subordinate integration vs sovereign upgrading.
How quickly people have forgotten about dirigisme, the economic system of state intervention in the economy adopted by France in the post-World War II era, and deployed by the Asian Tiger economies and East Asia more generally, including by China.
The point is that the foundational principles of dirigisme were deemed unacceptable to the Americans in particular - it was just communism with another name - and finally discredited with the accession to power of Reagan and Thatcher, having died a lingering death due to uneven results wherever it was implemented.
One suspects that Rosenthal has either never heard of it, or simply cant abide the thought of any role for the state other than minimal regulation. Or more crassly, he detests the Chinese, a hatred born of the envy that underlies modern Sinophobia.
He is not entirely wrong. Yes, indeed, China used industrial policy and defied the neoliberal policy prescriptions. It went against the dominant paradigm of the time. But global context matters Jostein.
China’s industrialisation coincided with two major trends in the 80s and 90s. The first was widespread deregulation and trade liberalisation based on neoliberalism, which was aggressively pushed internally and globally by Margaret Thatcher and Ronald Reagan. The second was the beginning of hyper-globalisation and the entrenchment of global production networks.
In this case, many American manufacturers wanted to take advantage of low wages in Asia, so they offshored their production. This is how America lost its manufacturing capabilities, and semiconductors are a perfect example in this case. Without the widespread trade liberalisation of the time, China would not have found a market for its goods, no matter how cheap or efficient.
Many countries, including South Africa, saw their industries evaporate as soon as they liberalised their markets, following the dominant paradigm of the time -neoliberal ideology.
All of this requires strong state capacity and consistent implementation. This is true not only for China, but also for Japan, South Korea, and Vietnam. The same applies to the industrial rise of the United States, France, Germany, and Russia in history.
Is the issue whether access to Western markets is a just a necessary (but not sufficient) condition for China’s development or whether it was not even necessary at all? China would develop anyway but take longer?
I think we can all agree that access to Western markets is at best a necessary condition. And we can debate how quickly China could have developed on its own, but clearly the West benefited from China’s participation in the global market. I would not attribute this to “neo liberalism” or any sort of liberalism, let alone any implication that the West was doing China a favour. The West wanted to make China part of a global economic system in which the West would remain dominant. Lucky for us they miscalculated!🤣
When the west claims credits for china's success, they ignore the fact that by their theory the market has its own logic, because that means whatever they did was forced upon them by the law of economics and China would have developed anyway, which undermines the narrative they try to build which is that "the west opening to China" was their benevolent design.
I think this is right, with the VERY important caveat that this was only possible under fiscal dominance and fiat currency usage—which is unstable.
Under an international sound money system, the neoliberal (and classical liberal) assumptions would hold. Transparency and free markets would be rewarded, not state-backed action, financialization, and capitalization.
What are your thoughts?
You don't say what Rosenthal's reaction to you making this clear to him was. I assume he was unmoved.
I really had to stop reading the Economist recently and when they do that survey about why I was leaving I mentioned their skewed China reporting as one reason. I doubt anyone at that publication read my comments. :-)
Many of the investments overseas by Chinese privately-owned enterprises were blocked by western governments with the pretense of national security. Otherwise, there would be more win-win opportunities arising from such investments.
China is the beneficiary of free trade and free movement of capital. https://igreaterchina.substack.com/p/fortifying-the-hegemon-internal-discipline?utm_campaign=post-expanded-share&utm_medium=web
China did not rise by “embracing free trade” in the abstract. It rose by practicing selective integration while retaining control over strategic layers of the national constraint stack.
The real divide is not openness vs closure, but subordinate integration vs sovereign upgrading.
How quickly people have forgotten about dirigisme, the economic system of state intervention in the economy adopted by France in the post-World War II era, and deployed by the Asian Tiger economies and East Asia more generally, including by China.
The point is that the foundational principles of dirigisme were deemed unacceptable to the Americans in particular - it was just communism with another name - and finally discredited with the accession to power of Reagan and Thatcher, having died a lingering death due to uneven results wherever it was implemented.
One suspects that Rosenthal has either never heard of it, or simply cant abide the thought of any role for the state other than minimal regulation. Or more crassly, he detests the Chinese, a hatred born of the envy that underlies modern Sinophobia.