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LawrenceD Post time: 2015-3-5 13:35
A "market economy" needs markets. The West created markets through pillaging and plundering and sett ...
A "market economy" needs markets. The West created markets through pillaging and plundering and settling on native lands thousands of miles from Europe. Billions of people were murdered and at times rendered extinct through the centuries of imperialism, colonialism, and of course capitalism. The legacy of slavery still haunts the United States today.
The Western model is based on the Capitalist market economy with the Capitalist Class playing the role of the "Invisible Hand" while the Chinese model is based on the Socialist market economy with the State-sector playing the role of the "Visible Hand". The old industrial economy of the 19th and 20th centuries was based on the mass production, distribution and consumption of consumer goods but the new internet economy of the 21st century will be based on knowledge-based services industries.
The Capitalist Class only looks at one metric -- Return on Investment (ROI) -- when investing their capital in the "free market" economy. But China's model is different because the Socialist State is now looking at different metrics -- Carbon Efficiency, Social Welfare, Public Housing, Infrastructure Connectivity, Labor Productivity, Knowledge-based Innovation, Social Entrepreneurship -- when formulating monetary, fiscal, economic and industrial policies to enable both State and private sectors to work towards a knowledge-based services economy for the 21st century.
Can China do better without large scale genocides and other war crimes? Does Li Keqiang think that Chinese entrepreneurs, "innovations" and whatnot are sufficient to lead China to prosperity? The collapse of capitalism or "market economy" was the main cause for WW1 and WW2. The struggle was over land, resources, and of course markets. Japan found itself unable to catch up with the West without the vast lands of China's Northeast, the gas fields in Southeast Asia, and of course cheap labor from the Asian masses. Of course, had Japan won, it would've looked hungrily at Australia and other parts of the world in search of more growth, more resources, more colonies to be conquered, more people to kill off.
"Free markets" work as long as private capital can reap profits based on ROI. That was the case shortly after Deng's reforms allowed private capital to be invested in labor-intensive export industries. For as long as profits could be made by labor arbitrage, this economic model worked which is why East Asian investors poured into China after the Western boycott following Tiananmen.
As labor costs have risen, this labor-intensive export-oriented economic model no longer works for China. As a result, private capital has sought profits elsewhere by relocating these "sweatshop factories" to lower-cost developing countries. And this is why Li Keqiang has now come up with a new economic model based on serving the domestic market of China.