Socialist America, state capitalist China

Jul 4, 2024
The flags of China and the USA overlapping.

It is said that a picture is worth a thousand words. So is a graph or chart.

Graph: supplied

All provoke questions and new ideas.

The above chart clearly portrays China’s economic rise as seen by it winning over and hosting top companies in competition with the United States.

It also conjures up some interesting questions…

Item #1. Regarding the relationship between the United States and China the common parlance is to refer to America as “capitalist and democratic” and call China “Communist China”. Looking at the chart one may wonder if this is accurate.

Further, Marx defined the difference between capitalism and socialism or communism being the location (public or private sectors of the economy) of the “forces of production” in each country. Also, employment. In the case of U.S., the largest sectors are the military, government, health services and law enforcement and penal care. These are all defined as public. They are much smaller in China. Also, taxes, which feed the public sector, are much higher in America.

History also offers some ideas. Capitalist countries as a rule grow better economically than socialist or communist ones. China’s gross national product or GDP growth is more than double America’s even though China is suffering from a broken housing bubble, the middle-income country crisis, and American placing economic sanctions on China.

Finally, China outshines the U.S. with its #1 ranking in trade, heavy industry, foreign aid and investments, steel production, patents and a number of other markers that are the bailiwick of capitalist countries.

May I say then we might consider a new narrative. Socialist America and State Capitalist China.

Item #2. A majority of academic pundits, statesmen, and media people speak of the global system heading toward multipolarity. And they approve of that future. Good riddance to the Cold War that gave us bipolarity that embraced MAD (mutual assured destruction), the dominance of ideology, and a constant fear of a nuclear World War III.

This ended in the 1990s with the demise of the Soviet Union and an interlude of unipolarity with the United States in command. But that did not last.

Anyway, as the chart above suggests the world is not multipolar. It is bipolar.

A number of facts and lots of data indicate this is indeed true.

The U.S. and China are the only superpowers. Russia, Japan, Germany and the UK are all much weaker in terms of economic size, financial power, military power (even though Russia has huge stock of nuclear weapons its defence budget is around one-tenth of the U.S.) diplomatic prowess, science and technology and other elements of power. Further, they are all in decline in most respects.

Wantabees such as India, Indonesia, Brazil and maybe a few more are too far behind the U.S. and China to be taken seriously. Perhaps a few decades later. Maybe not.

A new look at bipolarity suggests it was not such a bad system after all. It managed the rapid expansion of super weapons, rapid economic growth, and globalism. An unthinkable war did not happen. Bipolarity worked well owing to cooperation and collusion to cope with the constant fear of war.

That system has been rebuilt with China replacing the Soviet Union.

The difficulty with accepting bipolarity is that historically it was pretty much an untried system and in theory is a zero-sum system prone to war. Multipolarity prevailed in Western history as the balance of power system in operation before World War I. But today balancing power is too complex and difficult and impossible to reconstruct.

Item #3. Charts such as the one above are often used to predict or extrapolate the future. Looking at the one at hand one might expect China, which grew in hosting big global companies from few to as many as the U.S., while others, except China, saw no meaningful growth. Might China continue to grow in this metric to eclipse the U.S. in the next twenty years?

Certainly, China’s successes and it besting the U.S. measured by other metrics shows such a trend.

Why? In 1976, Mao died and after a short delay Deng Xiaoping became China’s leader. He ended China’s extreme egalitarian communism and adopted a free market, free trade system that was essentially capitalism. China boomed economically as never before and grew its GDP many times faster than the U.S. China, of course, had the advantage of being a poor country. But it grew faster longer than any large country ever had.

In 2008, the U.S. fell into recession followed by one of the worst recoveries ever. China continued its high-speed growth. As a result, China passed the U.S. to become number one in the world in industrial production, trade, foreign investments, economic assistance, and even GDP if measured in purchasing power parity.

In recent years, China has become number one in the world, passing the United States, in the number of scientific papers it produces and patents. It has bested America in artificial intelligence, quantum computers, and robotics (with more than half of the world’s total working in industry). It is way ahead in materials science, chemistry, engineering, environmental science, agricultural studies, physics and mathematics. According to Nature index, seven of the top ten universities in research are in China.

China has an advantage over the United States because of linking research to its industrial base. Meanwhile, its lead in engineering explains its major breakthroughs in weapons, including hyper speed missiles.

Explaining this, since 2000 China’s spending on research has increased 17-fold. And it is sill growing. America, with its multi-trillion dollar deficits cannot raise its spending on research or its military because of having to pay huge interest on its debt.

This, and the fact The Economist and other such organisations rate the U.S., not as a democracy, but as a flawed democracy and no longer consider it a model because of its debased legal system and equality under the law. Some foreign historians exclaim the U.S. is in a period of dark ages. China is experiencing a renaissance.

In conclusion, the above analysis includes some hard to accept data and conclusions. But they should at least be food for thought.

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